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Smartkarma Daily Briefs

Japan: Mercari Inc, Tokyo Stock Exchange Tokyo Price Index Topix and more

By | Daily Briefs, Japan

In today’s briefing:

  • Mercari (4385 JP) | Time to Flee
  • Human Capital Disclosure in ‘Yuho’ Report Is Good News, but There Are Challenges

Mercari (4385 JP) | Time to Flee

By Mark Chadwick

  • Topix inclusion could generate some solid domestic passive buying interest, but we think the fundamentals remain Bearish
  • Mercari’s GMV growth in Japan is slowing sharply. We see higher promotional costs impacting margins as competition with PayPay Flea market heats up
  • We think that street estimates are too high and we don’t see a reason why the stock should be trading at substantial premium to Z Holdings

Human Capital Disclosure in ‘Yuho’ Report Is Good News, but There Are Challenges

By Aki Matsumoto

  • I would like to discuss the issues on the Nikkei article, “Discussions are underway to disclose human capital in annual securities reports in fiscal 2023.”
  • It is good news for investors that the disclosure will be required in the legal documents. However, very few companies translate the document into English.
  • Companies should include content that matches the company’s management policy. From the investor’s standpoint, it’s required to carefully analyze whether the disclosed information are consistent with the company’s actual actions.

Before it’s here, it’s on Smartkarma

Health Care: Cal Maine Foods, Green Cross LabCell, iRay Technology and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Diamond Hill Small-Mid Cap Fund Q1 2022 Market Commentary
  • GC Cell (144510 KS): Enviable Portfolio of Cell Therapy Funded by Sample Test Service Business
  • IRay Technology (688301.CH) – Limited Market Space Casts Doubt on Future Growth Potential

Diamond Hill Small-Mid Cap Fund Q1 2022 Market Commentary

By Fund Newsletters

  • Diamond Hill invests on behalf of clients through a shared commitment to its valuation-driven investment principles, long-term perspective, capacity discipline and client alignment.
  • Amid a rocky market quarter overall, our portfolio’s negative returns still outpaced the Russell 2500 Index by a healthy margin in Q1.
  • From current levels, equity market returns over the next five years are likely to be below historical averages.
  • We believe we can achieve better-than-market returns over the next five years through active portfolio management.

GC Cell (144510 KS): Enviable Portfolio of Cell Therapy Funded by Sample Test Service Business

By Tina Banerjee

  • Green Cross LabCell (144510 KS) (now known as GC Cell) the world’s largest cell therapy product producer with its top selling anticancer drug, Immunecell-LC. The drug has label expansion scope.
  • The company has developed a pipeline of late and early-stage cell therapy candidates for solid tumors. It also has a strong position in global cell therapy CDMO business.
  • GC Cell’s unrivaled position in the specimen test services in Korea acts as the main cash cow to feed its future growth engine of cell therapy development.

IRay Technology (688301.CH) – Limited Market Space Casts Doubt on Future Growth Potential

By Xinyao (Criss) Wang

  • IRay’s performance has shown a trend of accelerating growth in 2021/2022Q1, mainly driven by the mobile DR sales during COVID-19 as well as the dental (CBCT) and industrial security businesses.
  • The sales of mobile DR would slow down after COVID is under control. The decreasing price due to fierce competition in grassroots markets would finally drag down gross profit margin. 
  • The concern is that the market space (DR/dental/industrial fields) is not big, with obvious growth ceiling. So, we lowered our revenue/profit margin forecast and we think iRay is overvalued 

Before it’s here, it’s on Smartkarma

Financials: Ethereum, Tokyo Stock Exchange Tokyo Price Index Topix and more

By | Daily Briefs, Financials

In today’s briefing:

  • Ribbon Finance
  • Human Capital Disclosure in ‘Yuho’ Report Is Good News, but There Are Challenges

Ribbon Finance

By Etherbridge

  • As our journey into Decentralised Finance (DeFi) protocols continues, we will look at the more exotic type of financial instruments available.
  • Over the past few weeks, we have covered many of the primary functions available, including exchanging with Uniswap, earning with Aave, yearn.finance and MakerDAO, staking with Lido and trading perpetual contracts with dYdX.
  • Last week we covered how one could trade option contracts with Hegic; these were very basic and consisted of buying put and call options.

Human Capital Disclosure in ‘Yuho’ Report Is Good News, but There Are Challenges

By Aki Matsumoto

  • I would like to discuss the issues on the Nikkei article, “Discussions are underway to disclose human capital in annual securities reports in fiscal 2023.”
  • It is good news for investors that the disclosure will be required in the legal documents. However, very few companies translate the document into English.
  • Companies should include content that matches the company’s management policy. From the investor’s standpoint, it’s required to carefully analyze whether the disclosed information are consistent with the company’s actual actions.

Before it’s here, it’s on Smartkarma

Equity Capital Markets: HPSP and more

By | Daily Briefs, ECM

In today’s briefing:

  • HPSP Preview: A Korean IPO With Best Fundamentals So Far in 2022

HPSP Preview: A Korean IPO With Best Fundamentals So Far in 2022

By Douglas Kim

  • HPSP is getting ready for an IPO in Korea in July. This semiconductor equipment Korean company is an IPO with the best fundamentals for a so far in 2022.
  • The IPO base deal size is from $55 million to $60 million. Crescendo Equity Partners (backed by Peter Thiel) is the controlling shareholder of HPSP.
  • HPSP had revenue of 91.8 billion won (up 50% YoY) and operating profit of 45.2 billion won (up 82.3% YoY) in 2021. Its sales and profits surged higher in 1Q22.

Before it’s here, it’s on Smartkarma

TMT: Mercari Inc, Link Administration Holdings, HPSP and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Mercari (4385 JP) | Time to Flee
  • Weekly Deals Digest (5 Jun): Link Admin, Cocoaland, Xiamen Port, Link Net, WM Motor, GOGOX, Yancoal
  • HPSP Preview: A Korean IPO With Best Fundamentals So Far in 2022

Mercari (4385 JP) | Time to Flee

By Mark Chadwick

  • Topix inclusion could generate some solid domestic passive buying interest, but we think the fundamentals remain Bearish
  • Mercari’s GMV growth in Japan is slowing sharply. We see higher promotional costs impacting margins as competition with PayPay Flea market heats up
  • We think that street estimates are too high and we don’t see a reason why the stock should be trading at substantial premium to Z Holdings

Weekly Deals Digest (5 Jun): Link Admin, Cocoaland, Xiamen Port, Link Net, WM Motor, GOGOX, Yancoal

By Arun George


HPSP Preview: A Korean IPO With Best Fundamentals So Far in 2022

By Douglas Kim

  • HPSP is getting ready for an IPO in Korea in July. This semiconductor equipment Korean company is an IPO with the best fundamentals for a so far in 2022.
  • The IPO base deal size is from $55 million to $60 million. Crescendo Equity Partners (backed by Peter Thiel) is the controlling shareholder of HPSP.
  • HPSP had revenue of 91.8 billion won (up 50% YoY) and operating profit of 45.2 billion won (up 82.3% YoY) in 2021. Its sales and profits surged higher in 1Q22.

Before it’s here, it’s on Smartkarma

China: Xiamen International Port H, China Power International, Modern Land China, iRay Technology and more

By | China, Daily Briefs

In today’s briefing:

  • Merger Arb Mondays (6 Jun) – Xiamen Port, Link Admin, Cocoaland, Link Net, Australian Unity Office
  • China Power International (2380 HK): Moving in the Right Direction
  • Morning Views Asia: Modern Land China
  • IRay Technology (688301.CH) – Limited Market Space Casts Doubt on Future Growth Potential


China Power International (2380 HK): Moving in the Right Direction

By Osbert Tang, CFA

  • We think the underperformance of China Power International (2380 HK) (CPI) against the market in this year is unjustified given a projected improvement in profitability.
  • CPI has secured coal supply with more than 60% of contracts on annual long-term basis within the benchmark price range. Also, power tariff is expected to be on an uptrend.
  • The proposed new management incentive scheme will better align management’s and shareholders’ interests. CPI also indicated good room to lower leverage in this year while sustaining growth. 

Morning Views Asia: Modern Land China

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.


IRay Technology (688301.CH) – Limited Market Space Casts Doubt on Future Growth Potential

By Xinyao (Criss) Wang

  • IRay’s performance has shown a trend of accelerating growth in 2021/2022Q1, mainly driven by the mobile DR sales during COVID-19 as well as the dental (CBCT) and industrial security businesses.
  • The sales of mobile DR would slow down after COVID is under control. The decreasing price due to fierce competition in grassroots markets would finally drag down gross profit margin. 
  • The concern is that the market space (DR/dental/industrial fields) is not big, with obvious growth ceiling. So, we lowered our revenue/profit margin forecast and we think iRay is overvalued 

Before it’s here, it’s on Smartkarma

South Korea: Kakao Pay, HPSP, Green Cross LabCell and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Kakao Pay Shorting Entry Point: June 9 KOSPI 200 or June 17 FTSE?
  • HPSP Preview: A Korean IPO With Best Fundamentals So Far in 2022
  • GC Cell (144510 KS): Enviable Portfolio of Cell Therapy Funded by Sample Test Service Business

Kakao Pay Shorting Entry Point: June 9 KOSPI 200 or June 17 FTSE?

By Sanghyun Park

  • As for the FTSE rebalancing, when basket trading was not feasible, the individual trading setup of large-cap additions had a significantly lower win rate.
  • Local tutes use the FTSE rebalancing as a selling opportunity. And this trading pattern of local tutes was particularly prominent in large-cap additions.
  • I suggest avoiding flow trading for the additions this time. Kakao Pay? We should aim at the June 9 KOSPI 200 instead of the June 17 FTSE for shorting entry.

HPSP Preview: A Korean IPO With Best Fundamentals So Far in 2022

By Douglas Kim

  • HPSP is getting ready for an IPO in Korea in July. This semiconductor equipment Korean company is an IPO with the best fundamentals for a so far in 2022.
  • The IPO base deal size is from $55 million to $60 million. Crescendo Equity Partners (backed by Peter Thiel) is the controlling shareholder of HPSP.
  • HPSP had revenue of 91.8 billion won (up 50% YoY) and operating profit of 45.2 billion won (up 82.3% YoY) in 2021. Its sales and profits surged higher in 1Q22.

GC Cell (144510 KS): Enviable Portfolio of Cell Therapy Funded by Sample Test Service Business

By Tina Banerjee

  • Green Cross LabCell (144510 KS) (now known as GC Cell) the world’s largest cell therapy product producer with its top selling anticancer drug, Immunecell-LC. The drug has label expansion scope.
  • The company has developed a pipeline of late and early-stage cell therapy candidates for solid tumors. It also has a strong position in global cell therapy CDMO business.
  • GC Cell’s unrivaled position in the specimen test services in Korea acts as the main cash cow to feed its future growth engine of cell therapy development.

Before it’s here, it’s on Smartkarma

Event-Driven: Keurig Dr Pepper Inc, Link Administration Holdings, Kakao Pay, Xiamen International Port H, Hensoldt AG and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • S&P500 Index Rebalance: One-Way Trade of US$30bn
  • Weekly Deals Digest (5 Jun): Link Admin, Cocoaland, Xiamen Port, Link Net, WM Motor, GOGOX, Yancoal
  • Kakao Pay Shorting Entry Point: June 9 KOSPI 200 or June 17 FTSE?
  • Merger Arb Mondays (6 Jun) – Xiamen Port, Link Admin, Cocoaland, Link Net, Australian Unity Office
  • DAX, MDAX, SDAX, TecDAX June 2022 Rebalance: Encavis & Hensoldt Top Positives; Hypoport Top Negative

S&P500 Index Rebalance: One-Way Trade of US$30bn

By Brian Freitas


Weekly Deals Digest (5 Jun): Link Admin, Cocoaland, Xiamen Port, Link Net, WM Motor, GOGOX, Yancoal

By Arun George


Kakao Pay Shorting Entry Point: June 9 KOSPI 200 or June 17 FTSE?

By Sanghyun Park

  • As for the FTSE rebalancing, when basket trading was not feasible, the individual trading setup of large-cap additions had a significantly lower win rate.
  • Local tutes use the FTSE rebalancing as a selling opportunity. And this trading pattern of local tutes was particularly prominent in large-cap additions.
  • I suggest avoiding flow trading for the additions this time. Kakao Pay? We should aim at the June 9 KOSPI 200 instead of the June 17 FTSE for shorting entry.


DAX, MDAX, SDAX, TecDAX June 2022 Rebalance: Encavis & Hensoldt Top Positives; Hypoport Top Negative

By Janaghan Jeyakumar, CFA

  • The index changes for DAX, MDAX, SDAX, and TecDAX were announced yesterday.
  • Beiersdorf AG (BEI GR) will move from MDAX to DAX while Delivery Hero SE (DHER GR) will move from DAX to MDAX.
  • Below is a closer look at the excess volume expectations and historical price and volume performance of the names involved in this Rebalance Event.

Before it’s here, it’s on Smartkarma

Consumer: Keurig Dr Pepper Inc, Kakao Pay, Cal Maine Foods and more

By | Consumer, Daily Briefs

In today’s briefing:

  • S&P500 Index Rebalance: One-Way Trade of US$30bn
  • Kakao Pay Shorting Entry Point: June 9 KOSPI 200 or June 17 FTSE?
  • Diamond Hill Small-Mid Cap Fund Q1 2022 Market Commentary

S&P500 Index Rebalance: One-Way Trade of US$30bn

By Brian Freitas


Kakao Pay Shorting Entry Point: June 9 KOSPI 200 or June 17 FTSE?

By Sanghyun Park

  • As for the FTSE rebalancing, when basket trading was not feasible, the individual trading setup of large-cap additions had a significantly lower win rate.
  • Local tutes use the FTSE rebalancing as a selling opportunity. And this trading pattern of local tutes was particularly prominent in large-cap additions.
  • I suggest avoiding flow trading for the additions this time. Kakao Pay? We should aim at the June 9 KOSPI 200 instead of the June 17 FTSE for shorting entry.

Diamond Hill Small-Mid Cap Fund Q1 2022 Market Commentary

By Fund Newsletters

  • Diamond Hill invests on behalf of clients through a shared commitment to its valuation-driven investment principles, long-term perspective, capacity discipline and client alignment.
  • Amid a rocky market quarter overall, our portfolio’s negative returns still outpaced the Russell 2500 Index by a healthy margin in Q1.
  • From current levels, equity market returns over the next five years are likely to be below historical averages.
  • We believe we can achieve better-than-market returns over the next five years through active portfolio management.

Before it’s here, it’s on Smartkarma

United States: Keurig Dr Pepper Inc, Cal Maine Foods, Ethereum and more

By | Daily Briefs, United States

In today’s briefing:

  • S&P500 Index Rebalance: One-Way Trade of US$30bn
  • Diamond Hill Small-Mid Cap Fund Q1 2022 Market Commentary
  • Ribbon Finance

S&P500 Index Rebalance: One-Way Trade of US$30bn

By Brian Freitas


Diamond Hill Small-Mid Cap Fund Q1 2022 Market Commentary

By Fund Newsletters

  • Diamond Hill invests on behalf of clients through a shared commitment to its valuation-driven investment principles, long-term perspective, capacity discipline and client alignment.
  • Amid a rocky market quarter overall, our portfolio’s negative returns still outpaced the Russell 2500 Index by a healthy margin in Q1.
  • From current levels, equity market returns over the next five years are likely to be below historical averages.
  • We believe we can achieve better-than-market returns over the next five years through active portfolio management.

Ribbon Finance

By Etherbridge

  • As our journey into Decentralised Finance (DeFi) protocols continues, we will look at the more exotic type of financial instruments available.
  • Over the past few weeks, we have covered many of the primary functions available, including exchanging with Uniswap, earning with Aave, yearn.finance and MakerDAO, staking with Lido and trading perpetual contracts with dYdX.
  • Last week we covered how one could trade option contracts with Hegic; these were very basic and consisted of buying put and call options.

Before it’s here, it’s on Smartkarma