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Smartkarma Daily Briefs

Jun 23
0

China: Hong Kong Hang Seng Index, Oriental Watch, Beijing Capital International Airport (BCIA), MicroPort NeuroTech, Guangzhou R&F Properties, Meituan and more

By | China, Daily Briefs

In today’s briefing:

  • Asia Top Long and Short Bets Update
  • Oriental Watch: Good Results in the Bag, Cautious H1 2023
  • Beijing Capital Intl Airport (694 HK): Preparing to Take Off
  • Pre-IPO MicroPort NeuroTech – The Industry, the Business and the Concern
  • Morning Views Asia: Country Garden Holdings Co, Fosun International, Greenland Holdings Corp
  • Hang Seng Index Constituents 22nd June 2022

Asia Top Long and Short Bets Update

By Thomas Schroeder

  • China A shares has been our top long pick but near 14,700 is due to reverse. Taiwan and Korea were top shorts followed by India (lagging Asia’s decline).
  • Near A50 14,700 resistance would bring the HSI back into our top short group. HSI and H shares display slowing upside momentum.
  • USD/JPY near our 137 PT is set for a tactical top/pullback while a JGB fade could see the Nikkei jolt lower.

Oriental Watch: Good Results in the Bag, Cautious H1 2023

By Sameer Taneja

  • Oriental Watch (398 HK) profit alert for >350 mn HKD affirms our conviction on the increasing dividend (74 HKD cents for FY22, implying a 15.7% dividend yield). 
  • Lockdowns in China (accounting for 67% of the revenue) cast doubt around how H1 2023 will shape up. 
  • With cash > 50% of market capitalization, we remain positive on the company maintaining its high dividend payout for FY23 despite weakness in H1. 

Beijing Capital Intl Airport (694 HK): Preparing to Take Off

By Osbert Tang, CFA

  • Share price of Beijing Capital International Airport (BCIA) (694 HK) underperformed that for Air China Ltd (753 HK) by wide margin in this year, which we believe is not justified.
  • Removal of lockdowns in various districts in Beijing and the revival of international passengers will be the major driver for BCIA to close the valuation gap.
  • The gradual relaxation of inbound international passengers at Beijing and the potential for a full border opening in early next years are the catalysts for BCIA’s performance.

Pre-IPO MicroPort NeuroTech – The Industry, the Business and the Concern

By Xinyao (Criss) Wang

  • The advantages of NeuroTech are mainly reflected in the comprehensive product portfolio and stable product performance, with higher gross margin, stronger cost control ability and first-mover advantage than its peers.
  • The major concerns here are the domestic shrinking market size due to the centralized procurement, the fierce market competition and the pain points on its sales model.
  • In terms of valuation, our view is that NeuroTech’s valuation could be higher than that of the peers such as Zylox-Tonbridge, HeartCare Medical, Peijia Medical and Sino Medical.

Morning Views Asia: Country Garden Holdings Co, Fosun International, Greenland Holdings Corp

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.

Hang Seng Index Constituents 22nd June 2022

By Untying The Gordian Knot

  • Hong Kong’s Link Riet has excellent assets, but the fears of further lockdowns and rising interest rates do not make for a good combination.
  • They seem to be leading other mall operators despite higher quality assets (mostly low-end and necessities).
  • Globally none of the delivery services has a cost-effective, scalable model, as they hit the regulatory challenges and hiring costs increases for every scaleup. 

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Jun 23
0

Most Read: Huitongda, Toshiba Corp, Thai Beverage, West African Resources, Emperador Inc and more

By | Daily Briefs, Most Read

In today’s briefing:

  • HSCI Index Rebalance and Stock Connect: Potential Changes in September
  • Oops, Price Leaks Early on Toshiba – Now We Have To Think About Probability
  • ThaiBev’s BeerCo IPO: What’s It Worth?
  • S&P/​​ASX Index Rebalance Preview (Sep): Plenty of High Impact Changes
  • Emperador (EMP PM): FTSE Inclusion Likely in September

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.

Oops, Price Leaks Early on Toshiba – Now We Have To Think About Probability

By Travis Lundy

  • An article this morning in the Yomiuri suggested JIC was bidding, even though they have not been in any “lists of 8 bidders” I have seen. The market yawned. 
  • An article this evening says bidders are offering “up to ¥7,000/share” but there is a range of pricing and conditions. Not surprising, but we know little. 
  • Shareholder structure matters. This has been event-y for a long time so I expect not many new buyers are ready to come in. This just shifts the range. And risk.

ThaiBev’s BeerCo IPO: What’s It Worth?

By Arun George

  • Thai Beverage (THBEV SP)’s BeerCo is once again pre-marketing an SGX IPO to raise US$0.8-1.0 billion, according to press reports.
  • In ThaiBev’s BeerCo IPO: Third Time’s the Charm?, we look at the latest developments and results. 
  • The target raise by offering 20% of BeerCo’s issued shares points to a valuation of US$4.0-5.0 billion. Our first-look valuation analysis suggests a valuation range of US$5.0-5.2 billion. 

S&P/​​ASX Index Rebalance Preview (Sep): Plenty of High Impact Changes

By Brian Freitas

  • There could be one change to the S&P/ASX 200 (AS51 INDEX) in July following the privatisation of Uniti Group Ltd (UWL AU). 
  • Then there will be a whole bunch of changes to the S&P/ASX 100 Index, S&P/ASX 200 (AS51 INDEX) and S&P/ASX 300 Index in September as part of the regular rebalance. 
  • There is large short interest on a couple of the potential adds and a lot of the potential deletes. That will drive stock price moves closer to implementation.

Emperador (EMP PM): FTSE Inclusion Likely in September

By Brian Freitas

  • Emperador Inc (EMP PM) passes the FTSE Median Liquidity test and the inclusion thresholds for full market cap and investable market cap and could be added in the FTSE GEIS.
  • The inclusion should take place at the September SAIR and that would require passive funds to buy over 84m shares. That is over 35 days of ADV.
  • A potential secondary listing in Singapore has moved the stock in the past and that could be another trigger for the stock to move higher.

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Jun 23
0

TMT: Meituan and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Hang Seng Index Constituents 22nd June 2022

Hang Seng Index Constituents 22nd June 2022

By Untying The Gordian Knot

  • Hong Kong’s Link Riet has excellent assets, but the fears of further lockdowns and rising interest rates do not make for a good combination.
  • They seem to be leading other mall operators despite higher quality assets (mostly low-end and necessities).
  • Globally none of the delivery services has a cost-effective, scalable model, as they hit the regulatory challenges and hiring costs increases for every scaleup. 

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Jun 23
0

Singapore: Thai Beverage, SPH REIT, Las Vegas Sands and more

By | Daily Briefs, Singapore

In today’s briefing:

  • ThaiBev’s BeerCo IPO: What’s It Worth?
  • SPH REIT Option Has 1 Week To Go – Look Elsewhere
  • Las Vegas Sands:  Totally Asia Facing, It Is Valued on Financial Strength Amid Covid Challenges

ThaiBev’s BeerCo IPO: What’s It Worth?

By Arun George

  • Thai Beverage (THBEV SP)’s BeerCo is once again pre-marketing an SGX IPO to raise US$0.8-1.0 billion, according to press reports.
  • In ThaiBev’s BeerCo IPO: Third Time’s the Charm?, we look at the latest developments and results. 
  • The target raise by offering 20% of BeerCo’s issued shares points to a valuation of US$4.0-5.0 billion. Our first-look valuation analysis suggests a valuation range of US$5.0-5.2 billion. 

SPH REIT Option Has 1 Week To Go – Look Elsewhere

By Travis Lundy

  • The SPH REIT (SPHREIT SP) “option” has performed admirably so far, up 4.2% in a month, and now it is time to look elsewhere. 
  • SPH REIT has outperformed its Retail S-REIT peers and is now near the top of its undisturbed 3-year range. 
  • And there are potential large flow events on the horizon which would benefit the Peers more than SPH REIT.

Las Vegas Sands:  Totally Asia Facing, It Is Valued on Financial Strength Amid Covid Challenges

By Howard J Klein

  • LVS is now entirely a balance sheet play in that its cash position vs. run rate assures good liquidity through the lingering covid crisis.
  • Maturities of its debt pose no problems for refis until ’24,’25–and even minimal then.
  • Recurring sporadic covid outbreaks and Beijing policies impede GGR recovery. We are moving LVS from BUY to HOLD to reflect the value of its sustainability rather than growth.

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Jun 23
0

Consumer: Thai Beverage, Emperador Inc, Sumber Alfaria Trijaya Tbk Pt, Oriental Watch, aCommerce Group, Pola Orbis Holdings, Las Vegas Sands, Home Retail and more

By | Consumer, Daily Briefs

In today’s briefing:

  • ThaiBev’s BeerCo IPO: What’s It Worth?
  • Emperador (EMP PM): FTSE Inclusion Likely in September
  • Sumber Alfaria Trijaya (AMRT IJ): LQ45 & MSCI Inclusion Done, FTSE Coming Up
  • Oriental Watch: Good Results in the Bag, Cautious H1 2023
  • ACommerce Pre-IPO – Updates Since Our Last Note – Probably Has to Scale Further to Become Profitable
  • Pola Orbis: Pola Moves to Capture Travel Retail Demand as Air Travel Recovers
  • Las Vegas Sands:  Totally Asia Facing, It Is Valued on Financial Strength Amid Covid Challenges
  • FTSE UK Quiddity Leaderboard Sep 2022: Sanne Group Deletion Seems Likely in 3Q 2022

ThaiBev’s BeerCo IPO: What’s It Worth?

By Arun George

  • Thai Beverage (THBEV SP)’s BeerCo is once again pre-marketing an SGX IPO to raise US$0.8-1.0 billion, according to press reports.
  • In ThaiBev’s BeerCo IPO: Third Time’s the Charm?, we look at the latest developments and results. 
  • The target raise by offering 20% of BeerCo’s issued shares points to a valuation of US$4.0-5.0 billion. Our first-look valuation analysis suggests a valuation range of US$5.0-5.2 billion. 

Emperador (EMP PM): FTSE Inclusion Likely in September

By Brian Freitas

  • Emperador Inc (EMP PM) passes the FTSE Median Liquidity test and the inclusion thresholds for full market cap and investable market cap and could be added in the FTSE GEIS.
  • The inclusion should take place at the September SAIR and that would require passive funds to buy over 84m shares. That is over 35 days of ADV.
  • A potential secondary listing in Singapore has moved the stock in the past and that could be another trigger for the stock to move higher.

Sumber Alfaria Trijaya (AMRT IJ): LQ45 & MSCI Inclusion Done, FTSE Coming Up

By Brian Freitas

Oriental Watch: Good Results in the Bag, Cautious H1 2023

By Sameer Taneja

  • Oriental Watch (398 HK) profit alert for >350 mn HKD affirms our conviction on the increasing dividend (74 HKD cents for FY22, implying a 15.7% dividend yield). 
  • Lockdowns in China (accounting for 67% of the revenue) cast doubt around how H1 2023 will shape up. 
  • With cash > 50% of market capitalization, we remain positive on the company maintaining its high dividend payout for FY23 despite weakness in H1. 

ACommerce Pre-IPO – Updates Since Our Last Note – Probably Has to Scale Further to Become Profitable

By Clarence Chu

  • ACommerce Group (ACOM TB) is looking to raise about US$200m in its upcoming Thailand IPO. 
  • ACommerce is an ecommerce enabler providing end-to-end and ala carte ecommerce solutions for brands in Southeast Asia (SEA). 
  • In this note, we will discuss aCommerce’s updates since our last note.

Pola Orbis: Pola Moves to Capture Travel Retail Demand as Air Travel Recovers

By Oshadhi Kumarasiri

  • Pola Orbis Holdings (4927 JP) is expanding its Travel Retail presence in the region to capitalise on the surge in demand from the recovery of air travel.
  • Inbound demand could also return to Japanese cosmetics through the reopening of Japan’s borders to tourists.
  • The sector is yet to break out from the downtrend. Investors willing to get in early could do that with Pola Orbis with limited downside risk.

Las Vegas Sands:  Totally Asia Facing, It Is Valued on Financial Strength Amid Covid Challenges

By Howard J Klein

  • LVS is now entirely a balance sheet play in that its cash position vs. run rate assures good liquidity through the lingering covid crisis.
  • Maturities of its debt pose no problems for refis until ’24,’25–and even minimal then.
  • Recurring sporadic covid outbreaks and Beijing policies impede GGR recovery. We are moving LVS from BUY to HOLD to reflect the value of its sustainability rather than growth.

FTSE UK Quiddity Leaderboard Sep 2022: Sanne Group Deletion Seems Likely in 3Q 2022

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the potential index changes for the FTSE 100 Index and the FTSE 250 Index in the September 2022 Rebalance.
  • In addition to the Regular Rebalance changes, Sanne Group PLC (SNN LN) could get deleted during the quarter, leaving room for one intra-quarterly ADD for FTSE 250. 
  • There are more M&A events that could close in the next few months and trigger irregular index changes for both FTSE 100 and FTSE 250.

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Jun 23
0

South Korea: Kepco Engineering & Construction, Samsung C&T and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Discussing How We Should Time the KEPCO E&C Block Deal
  • Samsung C&T and Hyundai E&C: Two Main Beneficiaries of Neom (World’s Biggest Construction Project)

Discussing How We Should Time the KEPCO E&C Block Deal

By Sanghyun Park

  • Since KEPCO announced the sale of its stake in KEPCO E&C, this will happen. But the question is when, and the market was betting that it would not happen immediately.
  • But these bets collapsed yesterday. It is because Choo Kyung-ho, Deputy Prime Minister of Economy, publicly made remarks yesterday that seemed to pressure KEPCO to make additional self-rescue efforts.
  • KEPCO may aim at the level of ₩60,000 by applying a 5-7% discount rate from the mid-₩60,000 price. With this price in mind, we need to time this block deal.

Samsung C&T and Hyundai E&C: Two Main Beneficiaries of Neom (World’s Biggest Construction Project)

By Douglas Kim

  • Neom is the largest construction project in the world with total project size of nearly $500 billion. 
  • Neom has started to provide construction project awards for key projects in 1H 2022. Hyundai E&C and Samsung C&T consortium recently won a project estimated at $1 billion for Neom. 
  • Samsung C&T and Hyundai E&C are two key companies in Korea that will be long-term beneficiaries of the Neom futuristic city construction in Saudi Arabia. 

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Jun 23
0

Macro: Nikkei 225’s Comeback and more

By | Daily Briefs, Macro

In today’s briefing:

  • Nikkei 225’s Comeback
  • Could the BoJ Be Saved?
  • UK: Inflation Loses Some Core Support
  • CX Daily: To Keep Stimulus Flowing, China’s Local Governments Need a Budget Fix

Nikkei 225’s Comeback

By Shyam Devani

  • Emerging trends and dynamics across international markets coupled with the BoJ’s policy are lining up to support the Nikkei 225
  • Historical comparisons, if correct, also indicate a strong bounce. The price action on the Nikkei 225 itself is also bullish.
  • At this stage in a volatile market we remain fixed on short term dynamics and refrain from longer term outlooks where conviction still neds to be built

Could the BoJ Be Saved?

By Shyam Devani

  • Japan is clearly worried about a weaker JPY despite the BoJ’s bond  market policy
  • Could they be saved by external factors – namely a calming down or even reversal of rising US yields?
  • Historical comparisons as well as developments in commodities and the economy suggests the answer could be yes

UK: Inflation Loses Some Core Support

By Phil Rush

  • UK CPI inflation matched forecasts by rising slightly to 9.1% amid relatively small offsetting surprises, although the RPI was more adversely affected and rose to 11.7%.
  • Strength in food and energy is masking an easing of core pressures under most definitions. It’s too early to say if that’s a genuine turn or a mere lull.
  • Inflation remains too high, even if it’s not matching BoE fears, so ongoing rate hikes are necessary. FX pressure is encouraging potentially inappropriate aggression from some.

CX Daily: To Keep Stimulus Flowing, China’s Local Governments Need a Budget Fix

By Caixin Global

  • In Depth: To keep stimulus flowing, China’s local governments need a budget fix

  • Police officers probed over handling of Tangshan women’s assault

  • Henan resident sues health authorities alleging health code abuse

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Jun 23
0

United States: iShares Russell 2000 ETF, FTX Token and more

By | Daily Briefs, United States

In today’s briefing:

  • Downgrading Materials; SPX, NDX, Russell 2000 Testing Downtrend Channel Support; Biotech Buys
  • FTX Bails Out BlockFi; Voyager Announces $661M Exposure

Downgrading Materials; SPX, NDX, Russell 2000 Testing Downtrend Channel Support; Biotech Buys

By Joe Jasper

  • We remain bearish as long as the YTD downtrends remain intact on the SPX and NDX (QQQ), and as long as the 7.5-month downtrend remains intact on the Russell 2000(IWM).
  • There is potential for a bounce given the SPX, QQQ, and IWM are all at downtrend channel supports.
  • The continued rise of the U.S. dollar (DXY), 10-yr Treasury yield, and WTI crude oil is what we believe is fueling the bear market in equities.

FTX Bails Out BlockFi; Voyager Announces $661M Exposure

By Coinstack

  • BlockFi Secures $250 Million Bailout From FTX – BlockFi secures $250 million revolving credit facility from crypto exchange FTX, a week after competitor Celsius pauses withdrawals.

  • BlockFi says the deal ‘bolsters our balance sheet and platform strength.’

  • Voyager Discloses $661M Exposure to Three Arrows Capital – Voyager, a major crypto savings app has announced it has $661M in exposure to potentially insolvent hedge fund Three Arrows Capital, which is in a work out plan with its investors and lenders.

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Jun 22
0

South Korea: Meritz Securities, Kepco Engineering & Construction and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Meritz Securities: Another Major Treasury Shares Cancellation
  • Block Deal Sale of KEPCO Engineering & Construction Likely in 2H 2022
  • A Shorting Setup on Meritz Securities for K200’s Immediate SO Adjustment Due to Share Cancellation

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. 

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.

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.

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Jun 22
0

India: Ashok Leyland, Keystone Realtors, L&T Finance Holdings and more

By | Daily Briefs, India

In today’s briefing:

  • Ashok Leyland (AL IN) | Outperforming but Warrants Caution
  • Keystone Realtors Pre-IPO Tearsheet
  • L&T Finance Holdings – Real Estate Asset Sale to Accelerate Retailization

Ashok Leyland (AL IN) | Outperforming but Warrants Caution

By Pranav Bhavsar

  • Ashok Leyland (AL IN) ‘s volumes recovered in FY22 thanks to a much milder than expected omicron wave and market share gains.
  • Discounting lead gains, the absence of retail fleet owners in the market, and little excitement around the scrappage policy all warrant caution. 
  • While the stock is currently outperforming, channel feedback and valuations point to caution. 

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.

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.

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