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Smartkarma Daily Briefs

Aug 18
0

Daily Brief ECM: Steadfast Group Placement – Another Accretive Acquisition and more

By | Daily Briefs, ECM

In today’s briefing:

  • Steadfast Group Placement – Another Accretive Acquisition, past Deals Have Done Well
  • Pre-IPO Weimeizi (Guangdong) – The Market Position Is Not Solid

Steadfast Group Placement – Another Accretive Acquisition, past Deals Have Done Well

By Sumeet Singh

  • Steadfast (SDF AU) is looking to raise around A$225m from its placement to fund the acquisition of Insurance Brands Australia, an insurance distribution firm.
  • The company had undertaken a similar sized deal last year for another acquisition, that deal did well.
  • In this note, we will talk about the acquisition and run the deal through our ECM framework.

Pre-IPO Weimeizi (Guangdong) – The Market Position Is Not Solid

By Xinyao (Criss) Wang

  • WEIMEIZI develops the oral care market by means of large promotion and marketing so as to attract consumers, which helps Saky become one of the top brands in China.
  • However, with the layout of other long-lasting reputable brands and the entry of new brands, how to maintain the market share in fierce competition has become an important issue.
  • WEIMEIZI’s leading market position is not solid, unless it could create differentiated products and keep up with industry trends closely. 

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Aug 18
0

Daily Brief Credit: Morning Views Asia: Bharti Airtel and more

By | Credit, Daily Briefs

In today’s briefing:

  • Morning Views Asia: Bharti Airtel, Country Garden Holdings Co, Fantasia Holdings Group Co, Meituan

Morning Views Asia: Bharti Airtel, Country Garden Holdings Co, Fantasia Holdings Group Co, Meituan

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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Aug 18
0

Daily Brief Quantitative Analysis: Outperformance Ain’t Alpha and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • Outperformance Ain’t Alpha

Outperformance Ain’t Alpha

By Nicolas Rabener

  • Do we know outperformance and alpha are not the same?
  • One is the difference from a benchmark, the other is the unexplained return
  • A contribution analysis helps understand the return drivers, let’s dive in deeper!

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Aug 18
0

Daily Brief Technical Analysis: Meituan Bear Pressure Accelerating and more

By | Daily Briefs, Technical Analysis

In today’s briefing:

  • Meituan Bear Pressure Accelerating

Meituan Bear Pressure Accelerating

By Thomas Schroeder

  • June 27 call to sell strength in line and showing increasing downside pressure below the 185 support (now resistance).
  • Dual top at 210 induced a turn well under trendline resistance. Break of bear wedge support confirmed the macro sell signal.
  • Below 166 targets 140 where a stall in the decline/bounce is due (resistance near 160-66) but expected to give way for a test on the 110 low zone.

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Aug 18
0

Daily Brief Event-Driven: Update on the S-REIT Re-Allocation Trade and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Update on the S-REIT Re-Allocation Trade
  • Appier Group (4180 JP): Now TOPIX-Ready!
  • KOSDAQ150 Ad Hoc Index Rebalance: Hancom (030520) To Replace Vidente (121800)
  • MSCI Korea Flow Trading for August 31st
  • Net Marketing Japan (6175) “MBO” Tender Offer – Done Deal
  • SSE50 Index Rebalance Preview: Sector Rotation To Continue
  • Genex Gets an Improved A$0.25 Offer, Headcount Test a Risk, Board Hoping for an Auction
  • LX Semicon KOSDAQ→KOSPI Migration Event: Index Rebalance Trading
  • A Full Walkthrough of What Happens to Vidente & Hancom: KOSDAQ 150 Special Change
  • Judo Capital IPO Lock-Up – Gearing up for a A$650m Lock-Up Release

Update on the S-REIT Re-Allocation Trade

By Travis Lundy

  • In June-July I warned of a reinvestment trade into S-REITs due to the S$2.0-3.0bn cash-out by investors in Mapletree North Asia Commercial Trust and sellers into the SPHREIT Chain Offer.
  • Many investors who would need to re-allocate. The trade was to buy major S-REITs. From my last insight, a basket is up 5.3%. MCT has already topped out vs peers.
  • The question is…. is there still a trade left to run?

Appier Group (4180 JP): Now TOPIX-Ready!

By Janaghan Jeyakumar, CFA

KOSDAQ150 Ad Hoc Index Rebalance: Hancom (030520) To Replace Vidente (121800)

By Brian Freitas

MSCI Korea Flow Trading for August 31st

By Sanghyun Park

  • MSCI Korea’s August QIR features one deletion: SK Telecom. But Woori Financial, HYBE, and LG Energy will also present a notable impact as they face float rate changes.
  • We should consider executing flow trading on these names, even SKT, towards the effective date as much as possible, as the flow magnitude wouldn’t be enough to act proactively.
  • It’s been witnessed that SK Telecom’s recall and liquidation of short positions have been made preemptively this time, minimizing the risk of price distortion on the effective date.

Net Marketing Japan (6175) “MBO” Tender Offer – Done Deal

By Travis Lundy

  • Bain Capital Private Equity launched a deal for Net Marketing (6175 JP) at a 63% premium. 
  • That should be enough to get it done on its own, despite coming below the IPO price of 5yrs ago. 
  • In any case, Shareholder Structure makes this a completely done deal.

SSE50 Index Rebalance Preview: Sector Rotation To Continue

By Brian Freitas

  • Over 80% of the way through the review period for the December rebalance, we see 7 stocks in inclusion/exclusion zone. However, there can be a maximum of 5 changes.
  • We estimate a one-way turnover of 3.9% at the December rebalance leading to a one-way trade of CNY 2.85bn.
  • The potential adds have outperformed the potential deletes and the SSE50 Index (SSE50 INDEX) by a wide margin over the last few months.

Genex Gets an Improved A$0.25 Offer, Headcount Test a Risk, Board Hoping for an Auction

By Arun George

  • Genex Power Ltd (GNX AU) received an improved non-binding offer from Skip Capital/Stonepeak at A$0.25 per share, an 8.7% bump from the previously rejected A$0.23 offer.
  • The headcount test is emerging as a key risk as retail shareholders are voicing their displeasure. The offer is underwhelming based on precedent transactions and average sell-side price targets. 
  • The Board hopes that granting non-exclusive due diligence and stating an intention to recommend a binding A$0.25 offer will force rival bidders to kickstart an auction.    

LX Semicon KOSDAQ→KOSPI Migration Event: Index Rebalance Trading

By Sanghyun Park

  • LX Semicon announced that its board approved KOSPI migration on August 17. This migration requires shareholder approval, and a shareholder meeting will be scheduled for September 23.
  • The outflow of KOSDAQ 150 is estimated to be -1.37x ADTV. A passive impact of this magnitude should cause a price movement of at least 3%p.
  • But LX Semicon’s GICS sector won’t change after the KOSPI migration. We should refrain from trading with expectations for the possibility of KOSPI 200 inclusion at this point.

A Full Walkthrough of What Happens to Vidente & Hancom: KOSDAQ 150 Special Change

By Sanghyun Park

  • Vidente is a KOSDAQ 150 constituent. If designated as an administrative issue, it will be removed on the third trading day after the effective date of designation.
  • Hancom gets to replace Vidente, and rebalancing trading occurs at the close of August 19th. Hancom’s passive inflow should be 4.70x ADTV.
  • It seems that proactive long positions have already been built up significantly from today. So, we should consider getting out of the position earlier than usual towards Friday’s close.

Judo Capital IPO Lock-Up – Gearing up for a A$650m Lock-Up Release

By Sumeet Singh

  • Judo Capital raised about US$483m by selling a mix of primary and secondary shares in Nov 21. Its IPO linked lockup is set to expire later this month.
  • Judo Capital (JC) focuses on lending to small and medium-sized enterprises (SMEs) in Australia. It also offers a range of personal term deposit products to consumers.
  • In this note, we will talk about the lock-up dynamics and updates since our last note.

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Aug 18
0

Daily Brief Crypto: Ethereum Merge and Hard Forks- Pinching Pennies in an Efficient Market and more

By | Crypto, Daily Briefs

In today’s briefing:

  • Ethereum Merge and Hard Forks- Pinching Pennies in an Efficient Market
  • Why I Joined Amphibian Capital

Ethereum Merge and Hard Forks- Pinching Pennies in an Efficient Market

By Rose Choy

  • The Ethereum merge is expected in a month – when the existing chain merges with the proof-of-stake system and paves the way for a greener and more deflationary asset.
  • We examine the Merge and a potential hard fork in some detail and highlight some possible scenarios and trade ideas.
  • However, we conclude the current market reflects a successful Merge and Hard Fork efficiently, and little juice is left in most arbitrage trades.

Why I Joined Amphibian Capital

By Coinstack

  • The ICO fever in 2017 proved to be a high-risk environment for individuals wanting to participate in new blockchain project token releases, from accidentally sending funds to the wrong wallet, or some project teams absconding with funds.
  • In response to this, a new fundraising mechanism called IEOs came about. 
  • An Initial Exchange Offering, commonly referred to as an IEO, is a fundraising event administered by an exchange.

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Aug 18
0

Daily Brief Equity Bottom-Up: NEC (6701) | Significantly Undervalued with Upcoming Catalyst and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • NEC (6701) | Significantly Undervalued with Upcoming Catalyst
  • Tencent (700 HK): Revenue Decreased for First Time, Margin Recovering, Price Overly Impacted
  • Sea Ltd: Tough Times Ahead
  • India Channel Insight #44 | Home First, Aavas, IIFL Home Finance, Capri Global
  • JD.com (9618 HK): Pre-2Q22 Earnings, Will Slow Down and Then Recover from Lockdown
  • GoTo (GOTO IJ) – Let the Synergistic Journey Begin
  • Orion Corp – Record Results in 2Q 2022 Bolstered By Strong Sales in China, Russia, & Vietnam
  • Bruush Oral Care: This Microcap Is Out To “Own Your Bathroom”
  • Paradigm Biopharmaceuticals (PAR AU): Comfortable Funding Position Through 2024
  • Amplitude: Cash Flow Positive Quarter, Management Raised CY22 Revenue and Profitability Guidance

NEC (6701) | Significantly Undervalued with Upcoming Catalyst

By Mark Chadwick

  • NEC is geared into two mega-trends that will drive 9% CAGR in EBITDA through 2025 
  • NEC is a beneficiary of DX (digital transformation) in Japan and global 5G, which are both just starting to take off 
  • NEC Investment Day may be short-term catalyst, but it is the undervaluation relative to the long-term opportunity that is mispriced 

Tencent (700 HK): Revenue Decreased for First Time, Margin Recovering, Price Overly Impacted

By Ming Lu

  • In 2Q22, revenue decreased YoY for the first time on record.
  • Unexpectedly, FinTech revenue stopped growing in 2Q22, as users are conservative in borrowing and investing money.
  • However, we still believe Tencent’s stock price is overly impacted.

Sea Ltd: Tough Times Ahead

By Oshadhi Kumarasiri

  • Sea’s share price dropped 14% yesterday following its 2Q22 results as $2.9bn revenue ($3.0bn for consensus) and $659.4m operating loss excluding goodwill impairment ($594m for consensus) were weaker than expected.
  • After lowering the e-commerce revenue guidance by $400m in 1Q22, Sea Ltd (SE US)’s decision to suspend 2022 e-commerce revenue guidance in 2Q22 is an early indication of difficulties ahead.
  • Digital Entertainment’s gross bookings are down another 10% QoQ in 2Q22, which indicates that Free Fire’s revenue and profitability could continue to go down during the second half of 2022.

India Channel Insight #44 | Home First, Aavas, IIFL Home Finance, Capri Global

By Pranav Bhavsar

JD.com (9618 HK): Pre-2Q22 Earnings, Will Slow Down and Then Recover from Lockdown

By Ming Lu

  • Many consumers bought household freezers after the lift of lockdown.
  • Strict rules on physical stores drive consumers to online e-commerce platform.
  • Total express parcels increased by 8% YoY in China in July.

GoTo (GOTO IJ) – Let the Synergistic Journey Begin

By Angus Mackintosh

  • GoTo (GOTO IJ)‘s announcement last week of the integration of GoFood into the Tokopedia app is a further signal of continuing synergies taking place across the ecosystem.
  • This latest move follows GoPay’s integration into Tokopedia, which exceeded expectations plus further integration with Bank Jago, and the introduction of GoPay coins common rewards all providing growing synergies.
  • GoTo is a unique proxy to the Indonesian digital economy covering more verticals than any other player, with huge potential for ongoing synergies potentially throwing off higher returns. 

Orion Corp – Record Results in 2Q 2022 Bolstered By Strong Sales in China, Russia, & Vietnam

By Douglas Kim

  • Despite unfavorable business environment such as global inflation, Orion was able to generate excellent progress in sales and profit growth in countries including China, Vietnam, and Russia in 2Q 2022.
  • Orion had sales of 263.2 billion won (up 19.6% YoY) and operating profit of 35.7 billion won (up 170.3% YoY) in China. 
  • Due to a combination of attractive valuations and improving fundamentals along with restrictions of snacks imports from Taiwan to China, we continue to believe Orion’s shares could outperform the market.

Bruush Oral Care: This Microcap Is Out To “Own Your Bathroom”

By Ishan Majumdar

  • The emergence of new technological innovations has changed many aspects of the day-to-day life of consumers.
  • While these kinds of toothbrushes have been in the market for many years, with Oral-B (Procter & Gamble) and Philips, dominating the market, consumer adoption has been limited given the premium pricing of these electric toothbrushes.
  • It is a recently listed oral care company that is making highly advanced and sophisticated electric toothbrushes with sonic technology and making them available to the average American consumer at very reasonable prices.

Paradigm Biopharmaceuticals (PAR AU): Comfortable Funding Position Through 2024

By Tina Banerjee

  • Paradigm Biopharmaceuticals (PAR AU) announced A$66 million capital raising, comprising A$45.7 million institutional placement and rights issue offer of A$20.3 million at A$1.30 per share.
  • At the completion of the transaction, Paradigm will have a proforma cash position of $108.5 million, which funds the company into 2024.
  • Paradigm is expected to announce data from one of its key trials related to knee OA pain in September, which will be a near-term catalyst for the company.

Amplitude: Cash Flow Positive Quarter, Management Raised CY22 Revenue and Profitability Guidance

By Andrei Zakharov

  • Amplitude reported 2QCY22 results and raised CY22 revenue and profitability guidance. The 2Q print was solid, with +48% y/y revenue growth. 
  • The company generated ~$8M of free cash flows in the quarter, driven by a few large renewals. Total revenue was $58.1M, which topped consensus estimates.  
  • Management was confident that the company’s dollar-based net retention rate would be above 120% in the long term.

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Aug 18
0

Daily Brief Macro: Changes in Korean Regulations for Listed Companies: 5% Ownership & Overheated Short-Selling Stocks and more

By | Daily Briefs, Macro

In today’s briefing:

  • Changes in Korean Regulations for Listed Companies: 5% Ownership & Overheated Short-Selling Stocks
  • UK: Inflation’s Food Poisoning Worsens

Changes in Korean Regulations for Listed Companies: 5% Ownership & Overheated Short-Selling Stocks

By Douglas Kim

  • In this insight, we discuss the impact of the Korean financial regulators announcing numerous important changes related to 5% ownership and overheated short-selling stocks.
  • The changes in the 5% rule could have a greater impact on the smaller companies, especially those that could be potential M&A candidates.
  • The FSC also provided revised regulations for stocks that are designated as overheated short selling candidates. 

UK: Inflation’s Food Poisoning Worsens

By Phil Rush

  • UK inflation exceeded forecasts again as it rose to 10.1% and 12.3% on the CPI and RPI. The food price surge intensified enough to drive most of the upside.
  • We extend the food price trend, bolstering the forecast, but welcome the ongoing easing of the underlying inflation impulse.
  • Energy prices drive near-term inflation volatility, including through the ONS’s overdue methodological judgement about energy bill credits on 31 August.

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Aug 18
0

Daily Brief Singapore: ESR-LOGOS REIT, Sea Ltd and more

By | Daily Briefs, Singapore

In today’s briefing:

  • Update on the S-REIT Re-Allocation Trade
  • Sea Ltd: Tough Times Ahead

Update on the S-REIT Re-Allocation Trade

By Travis Lundy

  • In June-July I warned of a reinvestment trade into S-REITs due to the S$2.0-3.0bn cash-out by investors in Mapletree North Asia Commercial Trust and sellers into the SPHREIT Chain Offer.
  • Many investors who would need to re-allocate. The trade was to buy major S-REITs. From my last insight, a basket is up 5.3%. MCT has already topped out vs peers.
  • The question is…. is there still a trade left to run?

Sea Ltd: Tough Times Ahead

By Oshadhi Kumarasiri

  • Sea’s share price dropped 14% yesterday following its 2Q22 results as $2.9bn revenue ($3.0bn for consensus) and $659.4m operating loss excluding goodwill impairment ($594m for consensus) were weaker than expected.
  • After lowering the e-commerce revenue guidance by $400m in 1Q22, Sea Ltd (SE US)’s decision to suspend 2022 e-commerce revenue guidance in 2Q22 is an early indication of difficulties ahead.
  • Digital Entertainment’s gross bookings are down another 10% QoQ in 2Q22, which indicates that Free Fire’s revenue and profitability could continue to go down during the second half of 2022.

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Aug 18
0

Daily Brief South Korea: Hancom Inc, SK Telecom, LX Semicon, Orion Corp and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KOSDAQ150 Ad Hoc Index Rebalance: Hancom (030520) To Replace Vidente (121800)
  • MSCI Korea Flow Trading for August 31st
  • LX Semicon KOSDAQ→KOSPI Migration Event: Index Rebalance Trading
  • A Full Walkthrough of What Happens to Vidente & Hancom: KOSDAQ 150 Special Change
  • Orion Corp – Record Results in 2Q 2022 Bolstered By Strong Sales in China, Russia, & Vietnam

KOSDAQ150 Ad Hoc Index Rebalance: Hancom (030520) To Replace Vidente (121800)

By Brian Freitas

MSCI Korea Flow Trading for August 31st

By Sanghyun Park

  • MSCI Korea’s August QIR features one deletion: SK Telecom. But Woori Financial, HYBE, and LG Energy will also present a notable impact as they face float rate changes.
  • We should consider executing flow trading on these names, even SKT, towards the effective date as much as possible, as the flow magnitude wouldn’t be enough to act proactively.
  • It’s been witnessed that SK Telecom’s recall and liquidation of short positions have been made preemptively this time, minimizing the risk of price distortion on the effective date.

LX Semicon KOSDAQ→KOSPI Migration Event: Index Rebalance Trading

By Sanghyun Park

  • LX Semicon announced that its board approved KOSPI migration on August 17. This migration requires shareholder approval, and a shareholder meeting will be scheduled for September 23.
  • The outflow of KOSDAQ 150 is estimated to be -1.37x ADTV. A passive impact of this magnitude should cause a price movement of at least 3%p.
  • But LX Semicon’s GICS sector won’t change after the KOSPI migration. We should refrain from trading with expectations for the possibility of KOSPI 200 inclusion at this point.

A Full Walkthrough of What Happens to Vidente & Hancom: KOSDAQ 150 Special Change

By Sanghyun Park

  • Vidente is a KOSDAQ 150 constituent. If designated as an administrative issue, it will be removed on the third trading day after the effective date of designation.
  • Hancom gets to replace Vidente, and rebalancing trading occurs at the close of August 19th. Hancom’s passive inflow should be 4.70x ADTV.
  • It seems that proactive long positions have already been built up significantly from today. So, we should consider getting out of the position earlier than usual towards Friday’s close.

Orion Corp – Record Results in 2Q 2022 Bolstered By Strong Sales in China, Russia, & Vietnam

By Douglas Kim

  • Despite unfavorable business environment such as global inflation, Orion was able to generate excellent progress in sales and profit growth in countries including China, Vietnam, and Russia in 2Q 2022.
  • Orion had sales of 263.2 billion won (up 19.6% YoY) and operating profit of 35.7 billion won (up 170.3% YoY) in China. 
  • Due to a combination of attractive valuations and improving fundamentals along with restrictions of snacks imports from Taiwan to China, we continue to believe Orion’s shares could outperform the market.

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