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Smartkarma Daily Briefs

TMT: Prosus , Kurly Inc, Softbank Group, Qualtrics International and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Prosus: Finally, a Catalyst; Cash Flows, Capital Allocation, Should Limit Drop in Discount to NAV
  • Kurly: A Market Leader in Fresh Foods E-Commerce Market in Korea
  • Softbank Group – First Look at Q1 22 Performance
  • Qualtrics: Leading Pure-Play XM Provider. A Solid Risk-Reward Opportunity

Prosus: Finally, a Catalyst; Cash Flows, Capital Allocation, Should Limit Drop in Discount to NAV

By Wium Malan, CFA

  • Prosus (PRX NA)’s announced open-ended share repurchase programme, funded by on-market sale of its Tencent shares, is a significant positive catalyst to reduce its discount to NAV.
  • Continued operating losses will likely require funding through capital events, in the form of either asset sales or debt issuance.
  • Cash flow requirements and continued concerns around capital allocation should limit the reduction in the discount to NAV.

Kurly: A Market Leader in Fresh Foods E-Commerce Market in Korea

By Douglas Kim

  • Kurly is the number one player in Korea focusing on e-commerce of fresh foods. Kurly’s most recent valuation was about 4 trillion won in December 2021.
  • Coupang is trading at P/S and P/GP multiples of 1.2x and 7.4x (2021), respectively. Using these valuation multiples, Kurly’s valuation would be from 1.9 trillion won to 2.2 trillion won.
  • These valuations would represent nearly half of the 4 trillion won in private market valuation it received in December 2021.

Softbank Group – First Look at Q1 22 Performance

By Kirk Boodry

  • Vision Fund’s public portfolio lost $10bn in Q1 marking the third time in four quarters that valuation losses were in the tens of billions
  • Global tech weaness remains the main challenge as portfolio losses are matched with concerns on the private portfolio, especially ARM
  • And worries about ARM also feed into leverage concerns as Softbank’s QoQ decline in reported LTV was driven by an ARM upgrade.  Meanwhile, CDS prices are near all-time highs

Qualtrics: Leading Pure-Play XM Provider. A Solid Risk-Reward Opportunity

By Andrei Zakharov

  • Qualtrics International (XM US)  is the largest XM provider and pioneer in Experience Management. The company was founded in 2002 by Ryan Smith, Jared Smith, and their dad, Scott Smith.
  • In 2018, SAP acquired Qualtrics for ~$8B in an all-cash deal, one of the largest-ever acquisitions of a SaaS company.
  • We view Qualtrics International (XM US)  as well-positioned to continue to take market share with additional growth drivers such as new products and international expansion. 

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China: Geely Auto, Agile Property Holdings, Hongfa Technology Co Ltd A, Hong Kong Hang Seng Index, Powerlong Real Estate Holdings and more

By | China, Daily Briefs

In today’s briefing:

  • Shanghai/​​​​​​Shenzhen Southbound Connect: Weekly Moves (30 June 2022)
  • Chinese Property Weekly – 1 July 2022 – Lucror Analytics
  • Chinese Property Weekly – 1 July 2022 – Lucror Analytics
  • Shanghai/​​​​​​Shenzhen Northbound Connect: Weekly Moves (24 June 2022)
  • Hang Seng, MSCI China Near Major Base Breakouts; Bottoms-Up Stock Rec’s in Hong Kong, China, & Japan
  • Weekly Wrap – 01 Jul 2022
  • Weekly Wrap – 01 Jul 2022

Shanghai/​​​​​​Shenzhen Southbound Connect: Weekly Moves (30 June 2022)

By David Blennerhassett

  • Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
  • Overall, net inflow over the past week was ~US$1.5bn, split US$0.4bn for Shanghai and US$1.2bn for Shenzhen.
  • He largest inflows were into Geely Auto (175 HK), Li Auto (2015 HK), and HKEX (388 HK). The largest outflow was in China Mobile (941 HK) and CCB (939 HK).

Chinese Property Weekly – 1 July 2022 – Lucror Analytics

By Charles Macgregor

The Chinese Property Weekly focuses on providing updates in the Chinese real-estate sector, including recent regulatory and company developments, top and bottom performers, rating actions, as well as a list of bond maturities in the next 30 days.


Chinese Property Weekly – 1 July 2022 – Lucror Analytics

By Charles Macgregor

The Chinese Property Weekly focuses on providing updates in the Chinese real-estate sector, including recent regulatory and company developments, top and bottom performers, rating actions, as well as a list of bond maturities in the next 30 days.


Shanghai/​​​​​​Shenzhen Northbound Connect: Weekly Moves (24 June 2022)

By David Blennerhassett


Hang Seng, MSCI China Near Major Base Breakouts; Bottoms-Up Stock Rec’s in Hong Kong, China, & Japan

By Joe Jasper

  • Broad global MSCI equity indexes (ACWI,ACWI ex-U.S.,EAFE, and EM) remain bearish with YTD downtrends intact. Until these indexes reverse downtrends, we are bearish and view bounces as bear market rallies.
  • Major non-U.S. countries appear to be much further along in the bottoming process, a potential sign that U.S. indexes could take a back seat once global equities finally bottom.
  • Indexes that have not made a new low since March: Nikkei 225, TOPIX, TOPIX Small, Hang Seng, Europe’s EURO STOXX 50, and China’s MSCI China (MCHI-US) and China Internet (KWEB-US).

Weekly Wrap – 01 Jul 2022

By Charles Macgregor

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

  1. Sunac China Holdings
  2. Shimao Property Holdings
  3. Powerlong Real Estate Holdings
  4. JSW Steel Ltd
  5. Tata Steel Ltd

and more…


Weekly Wrap – 01 Jul 2022

By Charles Macgregor

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

  1. Sunac China Holdings
  2. Shimao Property Holdings
  3. Powerlong Real Estate Holdings
  4. JSW Steel Ltd
  5. Tata Steel Ltd

and more…


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South Korea: K Bank, Kurly Inc, OASIS Corp and more

By | Daily Briefs, South Korea

In today’s briefing:

  • K Bank: The First Internet-Only Bank In Korea
  • Kurly: A Market Leader in Fresh Foods E-Commerce Market in Korea
  • Oasis Corp: Market Leader of Organic Foods Online Sales in Korea

K Bank: The First Internet-Only Bank In Korea

By Douglas Kim

  • K Bank is the first Internet-only bank in Korea. K Bank is the second largest Internet bank in Korea after KakaoBank (323410 KS).
  • K Bank had revenues of 282.1 billion won (up 263.6% YoY) and operating profit of 24.5 billion won (turned black YoY) in 2021.
  • The recent declines in major cryptocurrencies are likely to have a negative impact on K Bank which could delay its IPO until 2023.

Kurly: A Market Leader in Fresh Foods E-Commerce Market in Korea

By Douglas Kim

  • Kurly is the number one player in Korea focusing on e-commerce of fresh foods. Kurly’s most recent valuation was about 4 trillion won in December 2021.
  • Coupang is trading at P/S and P/GP multiples of 1.2x and 7.4x (2021), respectively. Using these valuation multiples, Kurly’s valuation would be from 1.9 trillion won to 2.2 trillion won.
  • These valuations would represent nearly half of the 4 trillion won in private market valuation it received in December 2021.

Oasis Corp: Market Leader of Organic Foods Online Sales in Korea

By Douglas Kim

  • Oasis Corp is the market leader of organic foods online sales in Korea. 
  • Oasis Corp generated sales of 356.9 billion won (up 49.6% YoY) and an operating margin of 1.6% in 2021. From 2017 to 2021, Oasis Corp’s sales increased by 45.9% CAGR.
  • Oasis Corp has been consistently profitable unlike its competitors such as Kurly, Coupang, and SSG.com.

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Health Care: Dental Doctor Medical Holding Group, Max Healthcare Institute and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Pre-IPO Dental Doctor Medical Holding Group – An Uncertain Outlook and Concerns About Profitability
  • Max Healthcare (MAXHEALTH IN): 4QFY22 Review- Continued Growth Momentum; Better Profitability

Pre-IPO Dental Doctor Medical Holding Group – An Uncertain Outlook and Concerns About Profitability

By Xinyao (Criss) Wang

  • Dental Doctor has not established core competitiveness and high moat, and has to invest more on marketing and promotion to attract customers and drive growth.
  • The lack of dentists, weak talent and training system as well as high dentist turnover rate would be big concerns for the Company’s long term development, especially for nationwide expansion.
  • This industry has not yet entered the profit mode. Most of chain dental services providers are still in the stage of cash-burning expansion. So, we are conservative about the Company’s outlook.

Max Healthcare (MAXHEALTH IN): 4QFY22 Review- Continued Growth Momentum; Better Profitability

By Tina Banerjee

  • Max Healthcare Institute (MAXHEALT IN) reported Q4FY22 results in-line with expectations, with 12% revenue and 58% net profit growth. The EBITDA margin improved 70 basis points to 24.8% during Q4FY22.
  • Despite the Omicron, the average occupancy for the quarter stood at 68%, partly fueled by the international medical tourism bouncing back to ~90% of the pre-covid levels in March 2022.
  • The company plans to add over 2,800 beds in the next five years. For context, it has current bed capacity of 3,400. Capex will be funded through internal accrual.

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Thailand: Kasikornbank PCL, BG Container Glass PCL and more

By | Daily Briefs, Thailand

In today’s briefing:

  • KBANK : Return to Normal Operations
  • BGC : Packaging Remains a Key Focus

KBANK : Return to Normal Operations

By Pi Research

  • Maintain BUY for KBANK with a target price of Bt174.00. We are optimistic about the joint venture between KBANK and JMT. Going forward, we expect KBANK’s profitability to increase 
  • A joint venture between KBANK and JMT:  KBANK joined with JMT Network (JMT) in establishing JK Asset Management Co., Ltd. (JK AMC). The establishment of JK AMC will allow KBANK 
  • KBANK plans to sell NPLs of Bt50bn to JK AMC within 2022, which will alleviate KBANK’s future NPLs, improve net interest margin (NIM), and reduce potential provisions 

BGC : Packaging Remains a Key Focus

By Pi Research

  • Yesterday site visit to BVP and BGP plants came out as neutral tone.We do see its underlying growth potential but believe both will not be a growth driver for 2022-23. 
  • Yesterday’s company visit came in at neutral tone : We visited BVP (Paper packaging manufacturer) at Pathumthani and BGP (PET and Plastic films packaging manufacture) at Ayutthaya. 
  • A challenging growth roadmap, but only time will tell: The company target to achieve sales to Bt25bn by 2025,representing a 19% 4Y CAGR (2021-25E) by M&A strategy focusing at businesses 

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India: Zomato, Max Healthcare Institute and more

By | Daily Briefs, India

In today’s briefing:

  • Zomato Blinkit Deal: Stains Get More Murky
  • Max Healthcare (MAXHEALTH IN): 4QFY22 Review- Continued Growth Momentum; Better Profitability

Zomato Blinkit Deal: Stains Get More Murky

By Nitin Mangal

  • Zomato (ZOMATO IN) ‘s announcement to acquire Blinkit (BCPL) for all-stock deal worth INR 44.5 bn has rattled the market price of the stock in the trading sessions that followed.
  • While the management focuses on the cost synergies and the bigger picture, the acquisition has left several doubts, including the valuation and cash burning nature of Blinkit.
  • More importantly, it is the corporate governance that should be looked at, especially since this is an indirect RPT, as mentioned in our earlier report Zomato’s Investments Game: Stain on Governance.

Max Healthcare (MAXHEALTH IN): 4QFY22 Review- Continued Growth Momentum; Better Profitability

By Tina Banerjee

  • Max Healthcare Institute (MAXHEALT IN) reported Q4FY22 results in-line with expectations, with 12% revenue and 58% net profit growth. The EBITDA margin improved 70 basis points to 24.8% during Q4FY22.
  • Despite the Omicron, the average occupancy for the quarter stood at 68%, partly fueled by the international medical tourism bouncing back to ~90% of the pre-covid levels in March 2022.
  • The company plans to add over 2,800 beds in the next five years. For context, it has current bed capacity of 3,400. Capex will be funded through internal accrual.

Before it’s here, it’s on Smartkarma

Japan: Softbank Group, Shinko Electric Industries, JPY, Tokyo Stock Exchange Tokyo Price Index Topix, Ryohin Keikaku and more

By | Daily Briefs, Japan

In today’s briefing:

  • Softbank Group – Expiration of SenseTime Lock-Up Has Lopped $1.5bn off the VF Valuation
  • JPX-Nikkei 400 2022 Rebal: Final Predictions
  • USDJPY Disconnect
  • The Adoption of the Presence of Female Directors as a Criterion for Voting Was Finally a First Step
  • Ryohin Keikaku (7453) | Oops Something Went Wrong

Softbank Group – Expiration of SenseTime Lock-Up Has Lopped $1.5bn off the VF Valuation

By Kirk Boodry

  • Just as the December quarter was flattered by the last minute IPO of SenseTime Group (20 HK), expiration of the lockup six months later has delivered a corresonding valuation hit
  • Vision Fund is still up on that investment but the public portfolio is flirting with a $10bn loss for the quarter depending on how US shares trade later
  • The discount has improved modestly to 49% from 51% but remains at the high end of the recent range as worries on tech valuations cast a long shadow 

JPX-Nikkei 400 2022 Rebal: Final Predictions

By Janaghan Jeyakumar, CFA

  • JPX-Nikkei 400 is composed of stocks listed on the Tokyo Stock Exchange selected based on multiple metrics relating to size, liquidity, financial performance, and corporate governance.
  • The annual rebalance of the JPX-Nikkei 400 Index takes place in August every year and the cut-off date for the data used for this rebalance is the end of June.
  • In this insight, we take a look at Quiddity’s final predictions for Potential ADDs/DELs for the August 2022 review.

USDJPY Disconnect

By Shyam Devani

  • The slip in US yields has lead the US_Japan yield spread to move lower thereby putting USDJPY out of line with it
  • The danger is that once month end is over, USDJPY may “catch up” by trending down in the short term
  • In addition we see price action developments on USDJPY itself that reflects weakness in the uptrend

The Adoption of the Presence of Female Directors as a Criterion for Voting Was Finally a First Step

By Aki Matsumoto

  • I would like to discuss the Nikkei article, “Japanese asset management companies have decided to steer against a proposal to elect directors for companies that do not have female directors.
  • The reason why major Japanese investment managers have been reluctant to take action on diversity and governance is likely due to the sales policies of their parent companies,
  • Companies with higher percentage of women directors the boards have higher stock prices. I would like to encourage both investment managers and companies to accelerate their efforts in the future.

Ryohin Keikaku (7453) | Oops Something Went Wrong

By Mark Chadwick

  • Ryohin Keikaku (Muji) slashed its earnings guidance for FY8/22 by 32%
  • The retailer is facing a number of headwinds, only some of which are industry wide
  • We remain bearish as Muji lacks the pricing power to push through higher input costs

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Financials: JPY, Kasikornbank PCL, Tokyo Stock Exchange Tokyo Price Index Topix, Grupo Financiero Banorte, Itau CorpBanca and more

By | Daily Briefs, Financials

In today’s briefing:

  • USDJPY Disconnect
  • KBANK : Return to Normal Operations
  • The Adoption of the Presence of Female Directors as a Criterion for Voting Was Finally a First Step
  • CitiBanamex – Potential Bidders Get Serious, We Stay Cautious on Banorte
  • Itaú Corpbanca – Contrarian Buy Idea in the Andean Banks

USDJPY Disconnect

By Shyam Devani

  • The slip in US yields has lead the US_Japan yield spread to move lower thereby putting USDJPY out of line with it
  • The danger is that once month end is over, USDJPY may “catch up” by trending down in the short term
  • In addition we see price action developments on USDJPY itself that reflects weakness in the uptrend

KBANK : Return to Normal Operations

By Pi Research

  • Maintain BUY for KBANK with a target price of Bt174.00. We are optimistic about the joint venture between KBANK and JMT. Going forward, we expect KBANK’s profitability to increase 
  • A joint venture between KBANK and JMT:  KBANK joined with JMT Network (JMT) in establishing JK Asset Management Co., Ltd. (JK AMC). The establishment of JK AMC will allow KBANK 
  • KBANK plans to sell NPLs of Bt50bn to JK AMC within 2022, which will alleviate KBANK’s future NPLs, improve net interest margin (NIM), and reduce potential provisions 

The Adoption of the Presence of Female Directors as a Criterion for Voting Was Finally a First Step

By Aki Matsumoto

  • I would like to discuss the Nikkei article, “Japanese asset management companies have decided to steer against a proposal to elect directors for companies that do not have female directors.
  • The reason why major Japanese investment managers have been reluctant to take action on diversity and governance is likely due to the sales policies of their parent companies,
  • Companies with higher percentage of women directors the boards have higher stock prices. I would like to encourage both investment managers and companies to accelerate their efforts in the future.

CitiBanamex – Potential Bidders Get Serious, We Stay Cautious on Banorte

By Victor Galliano

  • Banorte and Santander have both hired M&A advisors for a potential Citibanamex bid, according to Reuters; Banco Azteca is not participating in the bidding, whilst Inbursa is potentially still interested
  • In the event of a bid, we do not expect Santander to be aggressive on price; Banorte could be more aggressive, which would increase its chances of a winning bid
  • Were Banorte to acquire Citibanamex, we continue to believe that its prospective dividend could be at risk; in essence, the risks of M&A still outweigh the potential opportunities

Itaú Corpbanca – Contrarian Buy Idea in the Andean Banks

By Victor Galliano

  • Itaú Corpbanca operates in Chile and Colombia, with the recent win by Colombian presidential candidate Gustavo Petro hitting Colombian share prices, including Itaú Corpbanca
  • Nonetheless, we see some evidence of fundamental recovery from a bottom up perspective in the case of Itaú Corpbanca, despite the political headwinds
  • We rate Itaú Corpbanca as a contrarian buy; it is an emerging recovery stock, unloved and undervalued by the market but with a firmer balance sheet base and returns recovering

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Most Read: SenseTime Group, HKEX, Tianqi Lithium, Softbank Group and more

By | Daily Briefs, Most Read

In today’s briefing:

  • SenseTime (20 HK): Lock-Up Expiry Will Bring BIG Passive Flow
  • ETFs in Stock Connect: List Announced; Effective 4 July
  • Tianqi Lithium (9696 HK): Big Discount to A-Shares & Index Inclusion Timeline
  • Tianqi Lithium A/H Listing – Large Deal but Its Been Priced to Go
  • Softbank Group – Expiration of SenseTime Lock-Up Has Lopped $1.5bn off the VF Valuation

SenseTime (20 HK): Lock-Up Expiry Will Bring BIG Passive Flow

By Brian Freitas

  • SenseTime Group (20 HK) currently has a float of 1.4%. That will increase to 46% at the end of June as pre-IPO and cornerstone investor lock-ups end.
  • The Hang Seng Tech Index FAF increase and potential inclusion in the Hang Seng China Enterprises Index will require passive trackers to buy 700m shares early September.
  • Economic stimulus in China, outlook for China tech, lock-up expiry, inclusion in Southbound Connect and flows from passive trackers will drive the stock for few months and provide trading opportunities.

ETFs in Stock Connect: List Announced; Effective 4 July

By Brian Freitas

  • CSRC and SFC have approved the inclusion of eligible ETFs in Stock Connect and trading of the ETFs under Stock Connect would begin from 4 July.
  • There are 4 ETFs included in Southbound Stock Connect, while there are 83 ETFs that have been included in Northbound Stock Connect.
  • Under Stock Connect, only secondary trading is allowed in the ETFs with no creations or redemptions permitted. This will have implications for short-term and long-term repo on the HSI/HSCEI/HSTECH indices.

Tianqi Lithium (9696 HK): Big Discount to A-Shares & Index Inclusion Timeline

By Brian Freitas

  • Tianqi Lithium (9696 HK) is looking to sell up to 188.74m shares to raise up to US$1.97bn. Pricing at HK$69-82/share is a 52-43% discount to Tianqi Lithium (002466 CH).
  • Between 32-38% of the total offer size is being taken by 7 cornerstone investors and they are locked in for 6 months from listing date (expected 13 July).
  • Tianqi Lithium (9696 HK) could be added to MSCI China in November, FTSE All-World and FTSE China 50 in December. Southbound Stock Connect could come online soon after listing.

Tianqi Lithium A/H Listing – Large Deal but Its Been Priced to Go

By Sumeet Singh

  • Tianqi Lithium (TL) is looking to raise up to US$1.7bn via its H-shares listing. It undertakes mining of lithium ore and manufacturing of lithium concentrate, lithium compounds and derivatives.
  • TL was the largest producer of mined lithium globally in terms of output in 2020 and ranked third in terms of revenue generated from lithium in 2020.
  • In this note, we take about the deal pricing and run the deal through our ECM framework.

Softbank Group – Expiration of SenseTime Lock-Up Has Lopped $1.5bn off the VF Valuation

By Kirk Boodry

  • Just as the December quarter was flattered by the last minute IPO of SenseTime Group (20 HK), expiration of the lockup six months later has delivered a corresonding valuation hit
  • Vision Fund is still up on that investment but the public portfolio is flirting with a $10bn loss for the quarter depending on how US shares trade later
  • The discount has improved modestly to 49% from 51% but remains at the high end of the recent range as worries on tech valuations cast a long shadow 

Before it’s here, it’s on Smartkarma

Macro: USDJPY Disconnect and more

By | Daily Briefs, Macro

In today’s briefing:

  • USDJPY Disconnect
  • Un-Real Neutral Rate Views
  • Fed Policy Outlook: Markets Face a Summer Tug of War Between Inflation and Growth Fears
  • Cambodia and Myanmar Race to Become the Next Apparel Manufacturing Hub

USDJPY Disconnect

By Shyam Devani

  • The slip in US yields has lead the US_Japan yield spread to move lower thereby putting USDJPY out of line with it
  • The danger is that once month end is over, USDJPY may “catch up” by trending down in the short term
  • In addition we see price action developments on USDJPY itself that reflects weakness in the uptrend

Un-Real Neutral Rate Views

By Phil Rush

  • Neutral rates still appear to have risen beyond reversing the covid-related crash. That makes policy more stimulative, pushing further tightening.
  • Adding inflation to “real” neutral estimates exaggerates the problem. Rates need not rise above inflation to lower it, as it is effective expectations that matter.
  • Mistaken fundamental views of neutrality encourage markets to price a possibility of spuriously high rates, contributing to excessive pricing (a probability-weighted mean).

Fed Policy Outlook: Markets Face a Summer Tug of War Between Inflation and Growth Fears

By Said Desaque

  • Changes to the Fed’s forward guidance will depend on incoming economic data over the summer. The Fed will only change policy stance once a return to price stability is achieved.
  • 30-Year fixed mortgage rates will probably breach 6% if the Fed retains a hawkish bias, particularly as quantitative tightening accelerates. The Fed will not be overly-concerned by cooler downstream activity. 
  • Markets may be disappointed by the Fed’s reaction to economic weakness, but elevated inflation makes easing policy impossible. US equities have corrected,  but are vulnerable to revised corporate profits expectations.

Cambodia and Myanmar Race to Become the Next Apparel Manufacturing Hub

By Caixin Global

  • From October 2021 to March 2022, China lost around 5% of its textile export orders, 7% of its furniture and 2% of its mechanical and electrical export orders from the United States to the 10-member Association of Southeast Asian Nations (ASEAN), especially Vietnam
  • A shift of factories away from China has been underway for years as China’s labor costs rise. Countries in Southeast Asia and South Asia such as Vietnam and India have become the top alternatives for their abundant and cheap labor forces
  • The relocation has been driven by lower costs and the trade war between China and the United States

Before it’s here, it’s on Smartkarma