Smartkarma Daily Briefs

Jun 22

Consumer: Alibaba Group, Sony Corp, Lucid Group, Accor SA and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Alibaba: More Money to Be Made on The Short Side
Sony (6758 JP): Image Sensors Set for Rebound & Long-Term Expansion
Race to Survival
Europe HY Trade Book – June 2022 – Lucror Analytics

Alibaba: More Money to Be Made on The Short Side

By Oshadhi Kumarasiri

After rising more than 40% since Q4 earnings, Alibaba (ADR) (BABA US) is threatening to break out from a downtrend that lasted a little less than 20 months.
We think this bounce is quite normal given the fact that the stock lost more than 76% of its value during a challenging time period.
We remain confident that Alibaba has more downside potential and thinks that this is yet another opportunity to make money on the short side.

Sony (6758 JP): Image Sensors Set for Rebound & Long-Term Expansion

By Scott Foster

Aided by the weak yen, Imaging & Sensing Solutions should return as a major profit driver in FY Mar-23.
Capacity expansion should help SONY regain image sensor market share over the next 3-4 years.
Participation in TSMC’s foundry project in Kyushu should add to the division’s long-term potential.

Race to Survival

By subSPAC

Electric Vehicle Startup Lucid Motors, the poster child for the SPAC Boom in 2021, has seen its valuation plummet in recent months amidst a string of production & quality control issues, in addition to other demand headwinds.
As the macroeconomic environment deteriorates further, some rivals claim that the company could go bankrupt unless it cuts back on spending and reprices its vehicles.
Elon Musk had an ominous warning for EV startup Lucid Motors last week

Europe HY Trade Book – June 2022 – Lucror Analytics

By Charles Macgregor

The Europe HY Trade Book for June 2022 includes high-conviction trade ideas drawn from our European HY coverage universe, along with relative-value scatter plots and tables by industry.

Before it’s here, it’s on Smartkarma

Jun 22

Equity Capital Markets: Thai Life Insurance, Keystone Realtors and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Thai Life Insurance Pre-IPO – Industry Dynamics and Domestic Peer Comparison Aren’t Very Encouraging
Keystone Realtors Pre-IPO Tearsheet

Thai Life Insurance Pre-IPO – Industry Dynamics and Domestic Peer Comparison Aren’t Very Encouraging

Thai Life Insurance is looking to raise up to US$1bn in its upcoming Thailand IPO.
Thai Life Insurance is one of the largest life insurance companies in Thailand, third by assets. As of Mar 2022, it had 64,000 insurance agents.
In this note, we will talk about the industry dynamics and undertake a peer comparison versus its domestic peers.

Keystone Realtors Pre-IPO Tearsheet

By Ethan Aw

Keystone Realtors (3324626Z IN) is looking to raise about US$109m in its upcoming India IPO. The deal will be run by Axis Capital and Credit Suisse.
Keystone Realtors is a real estate developer which develops projects under the Rustomjee brand, with operations based solely in India.
As of March 31, 2022, it has developed 20.05m sqft of residential buildings, premium gated estates, townships, corporate parks, retail spaces, schools, iconic landmarks and various other real estate projects.

Before it’s here, it’s on Smartkarma

Jun 22

Event-Driven: Huitongda, Toshiba Corp, Resapp Health, Shinko Shoji, Meritz Securities, Piedmont Lithium, Kepco Engineering & Construction, SenseTime Group, Total Access Communication and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

HSCI Index Rebalance and Stock Connect: Potential Changes in September
Toshiba (6502) Strong Vs Peers on No News Means Susceptible to Risk On Underperformance
ResApp (RAP AU): Low-End Pfizer Offer As Cough Trial Fails
Shinko Shoji (8141) Buyback – Possibly An Interesting Development
Meritz Securities: Another Major Treasury Shares Cancellation
S&P/ASX Quiddity Leaderboard Sep 2022: Uniti Deletion & Many Other Changes for ASX 200 & 300
Block Deal Sale of KEPCO Engineering & Construction Likely in 2H 2022
SenseTime Lock-Up -Investment Blacklist Will Further Pressurize the Upcoming US$18bn Lock-Up Release
DTAC/True Merger: Administrative Court Ruling a Positive
ResApp’s Confirmatory Study Fails, Resulting in Pfizer’s Lower A$0.146 Offer

HSCI Index Rebalance and Stock Connect: Potential Changes in September

By Brian Freitas

We see 28 potential inclusions to the HSCI in September, plus another 9 stocks that are close to the inclusion cutoff. Some stocks are already a part of Stock Connect.
There could be 22 deletions from the index on market cap, liquidity and prolonged suspension. Most of the deletions would be moved to the ‘sell-only’ Southbound Stock Connect list.
Some of the stocks that remain in the HSCI could move to the ‘sell-only’ Southbound Stock Connect list since their average market cap drops below HKD 5bn.

Toshiba (6502) Strong Vs Peers on No News Means Susceptible to Risk On Underperformance

Toshiba Corp (6502 JP) sees its AGM next week with new directors and a possible privatisation process ongoing. But the AGM is a done deal and privatisation is not.
The event-i-ness of Toshiba keeps it “supported” while its better-valued and higher-growth peers fall harder in the face of recent overall market weakness.
Toshiba promised transparency on its privatisation process, and so far, it has delivered everything it promised. The next “transparency” likely comes in November.

ResApp (RAP AU): Low-End Pfizer Offer As Cough Trial Fails

By David Blennerhassett

Disappointingly, the sensitivity and specificity of ResApp Health (RAP AU)‘s cough trial were significantly lower than its March pilot study.
As such, the Scheme Consideration from Pfizer Inc (PFE US) will be A$0.146/share, which is still a 62.2% premium to the undisturbed price.
Trading super wide to terms after short-term punters kicked out.

Shinko Shoji (8141) Buyback – Possibly An Interesting Development

Smallcap semiconductor/component/design/assembly service trading house Shinko Shoji (8141 JP) has been buying back stock. It cancelled 20% of shares out last year. Today it buys back nearly 7%.
The question is, who sells. What one might want to do may depend on who sells. And we will know that in 1-5 days.
The stock itself trades at less than net current assets. The entire market cap and indeed equity is its funding of inventory and net receivables. It’s cheap.

Meritz Securities: Another Major Treasury Shares Cancellation

By Douglas Kim

In this insight, we discuss another 100 billion won worth of treasury shares cancellation just announced by Meritz Securities (008560 KS).
This share cancellation could potentially offset the recent controversies surrounding the FSS investigating the Meritz Asset Management CEO John Lee.
After the market close today, Meritz Securities announced that it plans to cancel 20.08 million treasury shares worth 100 billion won, representing 3% of outstanding shares.

S&P/ASX Quiddity Leaderboard Sep 2022: Uniti Deletion & Many Other Changes for ASX 200 & 300

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential index changes for S&P ASX 300, 200, 100, 50, and 20 in the September 2022 Rebalance.
In addition to the Regular Rebalance changes, M&A events involving Uniti Group Ltd (UWL AU) and Link Administration (LNK AU)could also cause index changes during this quarter.
The historical price and volume performance of high conviction ADDs/DELs and potential LONG-SHORT trade ideas involving these names are also discussed in this insight.

Block Deal Sale of KEPCO Engineering & Construction Likely in 2H 2022

By Douglas Kim

There has been increased speculation about a potential block deal sale of Kepco Engineering & Construction (052690 KS), driving its share price lower in the past several days.
KEPCO owns a 65.77% stake in Kepco Engineering & Construction (052690 KS).
We believe that there could be a further 10-20% downside risk for KEPCO E&C in the coming weeks.

SenseTime Lock-Up -Investment Blacklist Will Further Pressurize the Upcoming US$18bn Lock-Up Release

SenseTime Group (STG) raised US$741m in its Hong Kong IPO in Dec 21. The IPO barely made it through and was priced at the bottom of its IPO price range.
STG is a leading AI software company. STG was the largest AI software company in Asia in terms of 2020 revenue, as per Frost & Sullivan (F&S).
In this note, we will talk about the lock-up dynamics and updates since our last note.

DTAC/True Merger: Administrative Court Ruling a Positive

By Arun George

Press reports (here and here) suggest that Administrative Court has ruled out the request to suspend the DTAC/True merger and that the regulation which repeals NBTC’s veto rights is lawful.
This development suggests that the NBTC will apply remedial conditions rather than block the merger. The timeline for the satisfaction of VTO conditions is from late June to early August.
With the Court ruling increasing the probability of a successful merger, it is attractive to buy the current share price ratio of 9.698x vs the implied swap ratio of 10.221x.

ResApp’s Confirmatory Study Fails, Resulting in Pfizer’s Lower A$0.146 Offer

By Arun George

Disappointingly, Resapp Health (RAP AU)‘s confirmatory data readout condition was not satisfied, resulting in Pfizer Inc (PFE US)’s lower unconfirmed data offer price of A$0.146 per share.
The revised SID provides no obvious way for Pfizer to pull its offer. The still material premium to undisturbed price and open shareholder register suggests that the scheme will pass.
The scheme meeting will be held in early to mid-August. At the last close of A$0.125, the gross spread to the unconfirmed data offer price of A$0.146 is 16.8%.

Before it’s here, it’s on Smartkarma

Jun 22

China: Huitongda, Alibaba Group, SenseTime Group, Ping An Healthcare and Technology Company Limited, Logan Property Holdings and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

HSCI Index Rebalance and Stock Connect: Potential Changes in September
Alibaba: More Money to Be Made on The Short Side
SenseTime Lock-Up -Investment Blacklist Will Further Pressurize the Upcoming US$18bn Lock-Up Release
Ping An Healthcare and Technology (1833.HK) – Untenable Business Model Worsen the Logic and Outlook
Morning Views Asia: Jingrui Holdings

HSCI Index Rebalance and Stock Connect: Potential Changes in September

By Brian Freitas

We see 28 potential inclusions to the HSCI in September, plus another 9 stocks that are close to the inclusion cutoff. Some stocks are already a part of Stock Connect.
There could be 22 deletions from the index on market cap, liquidity and prolonged suspension. Most of the deletions would be moved to the ‘sell-only’ Southbound Stock Connect list.
Some of the stocks that remain in the HSCI could move to the ‘sell-only’ Southbound Stock Connect list since their average market cap drops below HKD 5bn.

Alibaba: More Money to Be Made on The Short Side

By Oshadhi Kumarasiri

After rising more than 40% since Q4 earnings, Alibaba (ADR) (BABA US) is threatening to break out from a downtrend that lasted a little less than 20 months.
We think this bounce is quite normal given the fact that the stock lost more than 76% of its value during a challenging time period.
We remain confident that Alibaba has more downside potential and thinks that this is yet another opportunity to make money on the short side.

SenseTime Lock-Up -Investment Blacklist Will Further Pressurize the Upcoming US$18bn Lock-Up Release

SenseTime Group (STG) raised US$741m in its Hong Kong IPO in Dec 21. The IPO barely made it through and was priced at the bottom of its IPO price range.
STG is a leading AI software company. STG was the largest AI software company in Asia in terms of 2020 revenue, as per Frost & Sullivan (F&S).
In this note, we will talk about the lock-up dynamics and updates since our last note.

Ping An Healthcare and Technology (1833.HK) – Untenable Business Model Worsen the Logic and Outlook

By Xinyao (Criss) Wang

Just as we analyzed before, things get worse for PAGD. The loss expanded and gross margin declined. The gap between PAGD and its peers (JD Health, Alibaba Health) is widening.
PAGD’s Achilles’ heel is its business model/profit model is untenable. The new HMO services system would not help turn things around because China’s national condition is different from the US.
Being on the wrong track, PAGD’s financial performance is expected to further weaken. We are conservative about PAGD’s outlook. Any brief upwards movement is just dead cat bounce.

Morning Views Asia: Jingrui 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.

Jingrui Holdings

Before it’s here, it’s on Smartkarma

Jun 22

Financials: Thai Life Insurance, Meritz Securities, Ekta, L&T Finance Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Thai Life Insurance Pre-IPO – Industry Dynamics and Domestic Peer Comparison Aren’t Very Encouraging
Meritz Securities: Another Major Treasury Shares Cancellation
A Shorting Setup on Meritz Securities for K200’s Immediate SO Adjustment Due to Share Cancellation
Global Emerging Markets Backs Indonesian Blockchain Firm’s $60m Raise
L&T Finance Holdings – Real Estate Asset Sale to Accelerate Retailization

Thai Life Insurance Pre-IPO – Industry Dynamics and Domestic Peer Comparison Aren’t Very Encouraging

Thai Life Insurance is looking to raise up to US$1bn in its upcoming Thailand IPO.
Thai Life Insurance is one of the largest life insurance companies in Thailand, third by assets. As of Mar 2022, it had 64,000 insurance agents.
In this note, we will talk about the industry dynamics and undertake a peer comparison versus its domestic peers.

Meritz Securities: Another Major Treasury Shares Cancellation

By Douglas Kim

In this insight, we discuss another 100 billion won worth of treasury shares cancellation just announced by Meritz Securities (008560 KS).
This share cancellation could potentially offset the recent controversies surrounding the FSS investigating the Meritz Asset Management CEO John Lee.
After the market close today, Meritz Securities announced that it plans to cancel 20.08 million treasury shares worth 100 billion won, representing 3% of outstanding shares.

A Shorting Setup on Meritz Securities for K200’s Immediate SO Adjustment Due to Share Cancellation

By Sanghyun Park

From a trading perspective, rather than short-term short squeezing, we need to consider a position setup that aims for passive outflow that occurs on the effective date of SO adjustment.
The KOSPI 200 passive fund will do this adjustment trading (selling Meritz Securities) at the close of the previous day of the Changed Listing Day, estimated at 0.25-0.30x ADTV.
The KRX will likely announce the Changed Listing Date early next week.

Global Emerging Markets Backs Indonesian Blockchain Firm’s $60m Raise

By Tech in Asia

Ekta is in the early stages of building a suite of blockchain-powered products including an NFT marketplace, a hybrid crypto exchange, a blockchain-based game, and a real estate investment business
Ekta’s mainnet, called EktaChain, tokenizes real-world assets such as property, music, art, and gold
Ekta token holders will be able to transact and interact with financial products to grow their wealth, earn money by playing games, as well as host, exchange, and trade digital and tangible assets

L&T Finance Holdings – Real Estate Asset Sale to Accelerate Retailization

By Emkay

Apollo Global Management is in advanced talks with LTFH to acquire real estate loans worth Rs80-90bn in a deal pegged at $1bn, reported The Economic Times
The report suggests the deal is expected to be finalized in the next few weeks.
The transaction will help LTFH get upfront cash, which it could use to deleverage the balance sheet and move toward its aim of becoming a retail-focused NBFC.

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.

Before it’s here, it’s on Smartkarma

Jun 22

Japan: Toshiba Corp, Shinko Shoji, Sony Corp, NTT (Nippon Telegraph & Telephone) and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Toshiba (6502) Strong Vs Peers on No News Means Susceptible to Risk On Underperformance
Shinko Shoji (8141) Buyback – Possibly An Interesting Development
Sony (6758 JP): Image Sensors Set for Rebound & Long-Term Expansion
NTT (Buy) – Updated Forecasts and Comments on Telework

Toshiba (6502) Strong Vs Peers on No News Means Susceptible to Risk On Underperformance

Toshiba Corp (6502 JP) sees its AGM next week with new directors and a possible privatisation process ongoing. But the AGM is a done deal and privatisation is not.
The event-i-ness of Toshiba keeps it “supported” while its better-valued and higher-growth peers fall harder in the face of recent overall market weakness.
Toshiba promised transparency on its privatisation process, and so far, it has delivered everything it promised. The next “transparency” likely comes in November.

Shinko Shoji (8141) Buyback – Possibly An Interesting Development

Smallcap semiconductor/component/design/assembly service trading house Shinko Shoji (8141 JP) has been buying back stock. It cancelled 20% of shares out last year. Today it buys back nearly 7%.
The question is, who sells. What one might want to do may depend on who sells. And we will know that in 1-5 days.
The stock itself trades at less than net current assets. The entire market cap and indeed equity is its funding of inventory and net receivables. It’s cheap.

Sony (6758 JP): Image Sensors Set for Rebound & Long-Term Expansion

By Scott Foster

Aided by the weak yen, Imaging & Sensing Solutions should return as a major profit driver in FY Mar-23.
Capacity expansion should help SONY regain image sensor market share over the next 3-4 years.
Participation in TSMC’s foundry project in Kyushu should add to the division’s long-term potential.

NTT (Buy) – Updated Forecasts and Comments on Telework

By Kirk Boodry

NTT has adopted a progressive telework policy that reportedly allows up to 50% of eligible employees (30,000) to work from anywhere in Japan
All telcos are likely to go down this path although NTT stands out as a larger and more traditional domestic company than KDDI or Softbank
We have updated our model for new segment reporting. Our new forecasts support a ¥4,500 target price (March 2023) and we remain at Buy.

Before it’s here, it’s on Smartkarma

Jun 22

TMT: Shinko Shoji, SenseTime Group, Grab, Trade Desk Inc and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Shinko Shoji (8141) Buyback – Possibly An Interesting Development
SenseTime Lock-Up -Investment Blacklist Will Further Pressurize the Upcoming US$18bn Lock-Up Release
Grab (GRAB US) – Mapping Out a More Prudent Future
The Trade Desk ($TTD)

Shinko Shoji (8141) Buyback – Possibly An Interesting Development

Smallcap semiconductor/component/design/assembly service trading house Shinko Shoji (8141 JP) has been buying back stock. It cancelled 20% of shares out last year. Today it buys back nearly 7%.
The question is, who sells. What one might want to do may depend on who sells. And we will know that in 1-5 days.
The stock itself trades at less than net current assets. The entire market cap and indeed equity is its funding of inventory and net receivables. It’s cheap.

SenseTime Lock-Up -Investment Blacklist Will Further Pressurize the Upcoming US$18bn Lock-Up Release

SenseTime Group (STG) raised US$741m in its Hong Kong IPO in Dec 21. The IPO barely made it through and was priced at the bottom of its IPO price range.
STG is a leading AI software company. STG was the largest AI software company in Asia in terms of 2020 revenue, as per Frost & Sullivan (F&S).
In this note, we will talk about the lock-up dynamics and updates since our last note.

Grab (GRAB US) – Mapping Out a More Prudent Future

By Angus Mackintosh

Grab continues to innovate and adapt to more challenging times, with a needle focus on moving toward profitability with ongoing efforts to reduce incentives and rationalise non-core businesses.
The launch of GrabMaps is interesting in that it has the potential to generate new revenue streams, create substantial cost savings, and enable targeted advertising adding to the enterprise segment.
Grab (GRAB US) has cash liquidity of US$8.2bn, which makes it look cheap relative to its market cap of only US$8.9bn and it is trading on 2.0x FY2023E EV/Sales.

The Trade Desk ($TTD)

By MT Capital

Consumerism has taken the Western World hostage over the course of the last few hundred years.
Defined loosely, this term encompasses a general social and economic order that encourages the acquisition of both goods and services in ever-increasing amounts.
Capitalism, at its very core, is fundamentally reliant on these behaviour patterns, with the constant and widespread itch for more spurring endless arrays of both corporate and nationwide growth and enrichment.

Before it’s here, it’s on Smartkarma

Jun 22

Singapore: Grab and more

By Smartkarma Daily Briefs | Daily Briefs, Singapore

In today’s briefing:

Grab (GRAB US) – Mapping Out a More Prudent Future

Grab (GRAB US) – Mapping Out a More Prudent Future

By Angus Mackintosh

Grab continues to innovate and adapt to more challenging times, with a needle focus on moving toward profitability with ongoing efforts to reduce incentives and rationalise non-core businesses.
The launch of GrabMaps is interesting in that it has the potential to generate new revenue streams, create substantial cost savings, and enable targeted advertising adding to the enterprise segment.
Grab (GRAB US) has cash liquidity of US$8.2bn, which makes it look cheap relative to its market cap of only US$8.9bn and it is trading on 2.0x FY2023E EV/Sales.

Before it’s here, it’s on Smartkarma

Jun 22

Thailand: Thai Life Insurance, Total Access Communication and more

By Smartkarma Daily Briefs | Daily Briefs, Thailand

In today’s briefing:

Thai Life Insurance Pre-IPO – Industry Dynamics and Domestic Peer Comparison Aren’t Very Encouraging
DTAC/True Merger: Administrative Court Ruling a Positive

Thai Life Insurance Pre-IPO – Industry Dynamics and Domestic Peer Comparison Aren’t Very Encouraging

Thai Life Insurance is looking to raise up to US$1bn in its upcoming Thailand IPO.
Thai Life Insurance is one of the largest life insurance companies in Thailand, third by assets. As of Mar 2022, it had 64,000 insurance agents.
In this note, we will talk about the industry dynamics and undertake a peer comparison versus its domestic peers.

DTAC/True Merger: Administrative Court Ruling a Positive

By Arun George

Press reports (here and here) suggest that Administrative Court has ruled out the request to suspend the DTAC/True merger and that the regulation which repeals NBTC’s veto rights is lawful.
This development suggests that the NBTC will apply remedial conditions rather than block the merger. The timeline for the satisfaction of VTO conditions is from late June to early August.
With the Court ruling increasing the probability of a successful merger, it is attractive to buy the current share price ratio of 9.698x vs the implied swap ratio of 10.221x.

Before it’s here, it’s on Smartkarma