Smartkarma Daily Briefs

The Nikkei reported this AM that Kawasaki Kisen Kaisha (9107 JP) CEO was considering increasing shareholder returns this fiscal year. It already has a juicy div and a ¥100bn buyback.
The company announced its buyback, and an agreement by two holders of 39% to sell in a ToSTNeT-3 buy, then started buying in the market. Results are impactful.
The shares are up today on this news, though they gave some back after the BOJ news. The outlook for more share price impact is not bad.

SET50 Index Rebalance: CENTEL, COM7, DELTA, RATCH Added; BLA, IRPC, KCE, SAWAD Out

Central Plaza Hotel, Com7 PCL, Delta Electronics Thai and Ratch Group will replace Bangkok Life Assurance, IRPC PCL, KCE Electronics PCL and Srisawad Power in the SET 50 Index.
Passive trackers will need to buy between 2-4 days of ADV on the adds while selling between 0.6-3 days of ADV on the deletes.
The adds have significantly outperformed the deletes over the last few months. We’d use any big moves over the next couple of days to trim positions.

Northbound Stock Connect Expansion: Potential Changes in 2023

On Monday, the CSRC and the SFC agreed to further deepen mutual stock market access between the Mainland and Hong Kong and promote the development of both capital markets.
For Northbound Stock Connect, the eligible universe has been widely expanded to include constituents of the SSE A Share Index and the SZSE Composite Index.
There are 1,112 stocks that join the eligible universe, and 938 stocks currently meet the criteria for Northbound Stock Connect inclusion. There are implications for inclusion in global indices.

Fengxiang (9977 HK): SPA Completed. Now For The Unconditional MGO

By David Blennerhassett

A little over two months since PAG Capital won the judicial auction to acquire 70.92% of Shandong Fengxiang (9977 HK), the acquisition has now cleared all regulatory clearances, including SAMR.
PAG will now be required to make an unconditional Offer for all H-shares at HK$1.5132/share. Separately, PAG intends to delist Fengxiang which involves Scheme-like delisting resolutions.
This is done. The timing for approving the SPA was bang-on with my expectation.

S&P/ASX Quiddity Leaderboard Mar 23: Index Changes Galore

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 run up to the March 2023 Rebalance.
Pendal Group (PDL AU)‘s deletion is expected in early-January 2023 and this could trigger an intra-review addition to the ASX 200 index.
I expect there to be one, two, and four changes, respectively, for the ASX 20, ASX 100, and ASX 200 indices in the March 2023 Rebalance.

KOSPI 200 Rebalancing Early Preview: Few Names Stand Out

One name is screened to newly join the index. That is Kum Yang (001570 KS). With a YTD performance of over 400%, it is currently in very safe territory.
Two constituents stand out as likely deletes at this point: Zinus (013890 KS) and Hwaseung Enterprise (241590 KS). The market cap gap with the next ones in line isn’t small.
Kum Yang’s passive impact is substantially low due to the recent surge in TV. But if it moves sideways and TV stabilizes downward, we should build preemptive flow trade setups.

Fengxiang (9977 HK)’s Share Transfer to PAG Complete, Unconditional MGO

By Arun George

PAG completed the auction procedures for the acquisition of a 70.92% stake in Shandong Fengxiang (9977 HK). This will trigger an unconditional MGO at HK$1.5132 per H Share.
As PAG has no compulsory acquisition rights, it will also seek shareholder delisting approval. The MGO is not conditional on the approval of the delisting resolution.
The composite document is to be despatched on or before 28 December. At last close and for an end-of-January payment, the gross and annualised spread is 5.1% and 65.9%, respectively.

Korea FSC: Official Mandate of Appraisal Rights in Split-Offs & Trading Ramifications

The exercise price is the arithmetic average of weighted average prices for the past two months, the past month, and the past week from the day before the board resolution.
Considering the governance structure of most local companies, a split-off will still be more likely to be preferred than a spin-off. Split-offs will emerge despite the mandate of appraisal rights.
We should look into staggering spread openings, with the pricing done on a two-month window, as a downward price revision will likely intensify toward the announcement with mandatory appraisal rights.

Selected European Holdcos and DLC: November/Mid-December‘22 Report

By Jesus Rodriguez Aguilar

Discounts to NAV of covered holdcos have showed a mixed performance during November and the first half of December, with the same number of spreads widening and tightening.
Discounts to NAV (31 October): C.F.Alba, 49.5%; GBL, 35.7%; Heineken Holding, 18%; Industrivärden C, 13.5%; Investor B, 15.5%; Porsche Automobile Holding 40.4%. The spread of Rio Tinto DLC widened to %.
Spreads tend to widen in bear markets but short-term recoveries provide opportunities on tightening discounts. Recommended trades are: GBL, Rio Tinto (DLC), CF Alba (long position).

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Dec 21

Daily Brief Equity Bottom-Up: China Catering Sector: In Search of Alpha and more

By Smartkarma Daily Briefs | Daily Briefs, Equity Bottom-Up

In today’s briefing:

China Catering Sector: In Search of Alpha
India Channel Insight #46 | Bata India, Campus Activewear
TMT Left for Dead Long Ideas: Adobe
TMT Left for Dead Long Ideas: Match
Netflix AVOD Not Chill
ClouDr Group (9955.HK) – Positive Profit Alert for 2022, Thoughts on Business Model and the Concerns
Korea Biotech & Healthcare: A Pair Trade Between Hanmi Science and Hanmi Pharm

China Catering Sector: In Search of Alpha

By Eric Chen

Sentiment driven rally is fading. Although COVID exit remains swing factor, individual company’s performance will increasingly be driven by their business models.
Our proprietary store expansion framework suggests divergent growth outlook for major players – stretched for Haidilao, moderate for Jiumaojiu and Yum China, and ample for Xiabuxiabu.
Xiabuxiabu is our top pick due to its strong turnaround not yet priced in depressed valuation. We also like Yum China but stay cautious on Jiumaojiu and Haidilao on valuation.

India Channel Insight #46 | Bata India, Campus Activewear

By Pranav Bhavsar

Consumer sentiment is soft, but competition is limited for both Bata India Ltd (BATA IN) and Campus Activewear (CAMPUS IN)
Bata enjoys good relationships with its distributors and franchisees, traction for offline sales channels is strong.
Campus is in an aggressive expansion mode, with leadership in the sports shoe segment driving sales.

TMT Left for Dead Long Ideas: Adobe

By Aaron Gabin

Adobe is down 42% in 2022, and down 22% relative to the S&P.
Valuation has been cut in half, and investors have voiced concerns and skepticism about its (incredibly) expensive acquisition of Figma in September.
Adobe remains better positioned than most large cap software peers as it maintained its guidance from October Analyst Day, highlighting the secular tide behind digital transformation efforts remains strong.

TMT Left for Dead Long Ideas: Match

By Aaron Gabin

Match is down 70% in 2022, and down 50% relative to the S&P.
Despite impressive new CEO and a self help story, shares have continued to underperform rival Bumble and the market by wide margin on macro concerns.
13x Forward EBITDA for a company forecast to grow EBITDA at a 16% CAGR through 2025 (we think closer to 20%), has 35% EBITDA margins and $1B in annual FCF

Netflix AVOD Not Chill

By Aaron Gabin

Multiple negative data points have come out reflecting limited initial uptake for Netflix’s ad-based tier.
(We think) Netflix lack of AVOD uptake is due to it being fully saturated in its major markets wheras competing services starting from scratch have higher AVOD uptake.
Lack of incremental subs from AVOD points towards a weaker than expected 4Q22 and downside to guidance…not good for a stock that has ripped since 2Q22 earnings.

ClouDr Group (9955.HK) – Positive Profit Alert for 2022, Thoughts on Business Model and the Concerns

By Xinyao (Criss) Wang

ClouDr released positive profit alert for 2022. We think ClouDr is in a virtuous circle based on its solid business model. It’s a matter of time before ClouDr achieves breakeven.
As the number of hospitals/pharmacies newly deploying SaaS modules increases, and the existing B-end users continue to receive new patients,ClouDr is able to absorb new C-end users at low cost.
When more powerful competitors come in and carve up B-end market, ClouDr’s long-term prospects may be uncertain, but its valuation shouldn’t be much lower than Ping An Good Doctor.

Korea Biotech & Healthcare: A Pair Trade Between Hanmi Science and Hanmi Pharm

By Douglas Kim

In this insight, we discuss a pair trade between Hanmi Science (long) and Hanmi Pharm (short). There are three major reasons we like this pair trade.
First, the gap between these two stocks have widened too much in the past year. Second, Hanmi Science may pay higher cash dividends due to inheritance tax issue.
Third, Hanmi Pharm’s valuations remain lofty and Hanmi Science’s valuation discount relative to its historical valuation has become more compelling.

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Dec 21

Daily Brief Macro: Alum. and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

Alum., Steel and Real Estate Dev Estimates in Accelerating Downtrends
What The Heck Is Happening In Japan?
CX Daily: China’s Drive to Kick the Foreign IT Habit

Alum., Steel and Real Estate Dev Estimates in Accelerating Downtrends

By Eric Fernandez, CFA

Analyst sentiment continues to improve. A net 26% of companies are seeing raised estimates up from net -6.5%. The average estimate revision across our universe is +1%, up from -6.5%.
Analyst sentiment is overcrowded, to the bullish side, for Oilfield Services, Aerospace, Restaurants, Apparel Retail and Software. They are bearish/crowded for Coal, Refiners, Engineering, Trucking, Semis, HR Services and REITs.
More groups are seeing new raises than the opposite. On the downside, we see Aluminum, Steel and Real Estate Development in accelerating downtrends. Alcoholic Beverages estimates are in decelerating uptrends.

What The Heck Is Happening In Japan?

By The Macro Compass

We all woke up to a major macro surprise: the Bank of Japan (BoJ) widened the allowed trading band for the 10-year Japanese government bonds (JGBs) by 25 bps – 10y JGBs can now trade between -50 bps and +50 bps.
While this doesn’t seem like a major change, it really is. To understand why, we need to take a small step back.
For years, Japan implemented an aggressively dovish monetary policy stance.

CX Daily: China’s Drive to Kick the Foreign IT Habit

By Caixin Global

Covid-19 /: Covid surge leaves blood banks begging for donations around China

Economy /: Key policy meeting highlights economic stability and restoring confidence

Property /: China real estate’s nagging woes are ‘top priority,’ state economist says

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Dec 21

Most Read: Highwealth Construction, Prada S.P.A., Haidilao, Kanzhun, Kawasaki Kisen Kaisha, GoTo, Delta Electronics Thai, Beijing-Shanghai High Speed Railway-A, Shandong Fengxiang and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Yuanta/P-Shares Taiwan Dividend Plus ETF: Day 1 Flows & Performance
Southbound Stock Connect Expansion: Potential Adds in 2023
Index Rebalance & ETF Flow Recap: S&P/ASX, HSCEI, HSTECH, Haidilao/Super Hi, CSI REIT
Boss Zhipin (2076 HK | BZ US) HK Dual Primary Listing on 22 Dec – Index, Southbound, and SPECIAL
KLINE (9107) CEO Comes Out Swinging – More LPG Carriers and More Shareholder Returns THIS YEAR
GoTo IPO Lockup Expiry Follow-Up – Has Corrected but Has Traded Relatively Little Volume
SET50 Index Rebalance: CENTEL, COM7, DELTA, RATCH Added; BLA, IRPC, KCE, SAWAD Out
Northbound Stock Connect Expansion: Potential Changes in 2023
Fengxiang (9977 HK): SPA Completed. Now For The Unconditional MGO
Good Morning Japan |Shock and Awe – BOJ Sends Ripple Though Markets in Kuroda’s Parting Shot

Yuanta/P-Shares Taiwan Dividend Plus ETF: Day 1 Flows & Performance

The Yuanta/P-shares Dividend Plus ETF (0056 TT) started to rebalance its holdings on Friday and will continue to do so for the next 4 trading days.
Stocks with buy flows dropped 1.82% on average on Friday while the stocks with sell flows rose 1.03%. On a flow weighted basis, the numbers were -2.01% vs +1.09%.
Given the large volumes at auction and the large moves on stocks, we cannot rule out the possibility that a lot of pre-positions were unwound at the close on Friday.

Southbound Stock Connect Expansion: Potential Adds in 2023

Last evening, the CSRC and the SFC agreed to further deepen mutual stock market access between the Mainland and Hong Kong and promote the development of both capital markets.
For Southbound Stock Connect, eligible foreign companies primary-listed in Hong Kong will become eligible. That could mean 5 additions to Stock Connect.
Additionally, Southbound access via Shanghai Stock Connect will be expanded to being it in alignment with Shenzhen Stock Connect. That could see 131 stocks added to Shanghai Stock Connect.

Index Rebalance & ETF Flow Recap: S&P/ASX, HSCEI, HSTECH, Haidilao/Super Hi, CSI REIT

It was a busy Friday with the implementation of the December rebalance for multiple indices. The Yuanta/P-shares Taiwan Dividend Plus ETF will continue to rebalance over the next 4 days.
The coming week should be relatively quiet with the announcement of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) changes expected.
There were large inflows to ETFs focused on China, Korea, Japan, Taiwan. There were inflows to Hang Seng H Share Index ETF and outflows from Tracker Fund of Hong Kong.

Boss Zhipin (2076 HK | BZ US) HK Dual Primary Listing on 22 Dec – Index, Southbound, and SPECIAL

Kanzhun (BZ US) a.k.a. has been listed in the US since about the same time as DiDi Global (DIDI US), and it had similar but minor tech issues pre-listing.
On Friday 16 December, the company announced it would conduct a Listing by Introduction in Hong Kong under the ticker Zhipin (2076 HK), listing on 22 Dec.
That creates an interesting launch supply/demand dynamic, likely HS Tech inclusion in March 2023, and then Southbound much later in 2023.

KLINE (9107) CEO Comes Out Swinging – More LPG Carriers and More Shareholder Returns THIS YEAR

The Nikkei reported this AM that Kawasaki Kisen Kaisha (9107 JP) CEO was considering increasing shareholder returns this fiscal year. It already has a juicy div and a ¥100bn buyback.
The company announced its buyback, and an agreement by two holders of 39% to sell in a ToSTNeT-3 buy, then started buying in the market. Results are impactful.
The shares are up today on this news, though they gave some back after the BOJ news. The outlook for more share price impact is not bad.

GoTo IPO Lockup Expiry Follow-Up – Has Corrected but Has Traded Relatively Little Volume

By Sumeet Singh

GoTo pre-IPO shareholders were released from the lockup on 1st Dec 2022, which led to a 47% slide in its share price.
We had written about the upcoming lockup expiry in our earlier note, GoTo IPO Lockup Expiry – US$13bn Lockup Release or in Other Words, the Real IPO.
While the price appears to be settling down now, given the intra-day trading limits in Indonesia, very little volumes have been transacted compared to the shares released from lockup.

SET50 Index Rebalance: CENTEL, COM7, DELTA, RATCH Added; BLA, IRPC, KCE, SAWAD Out

Central Plaza Hotel, Com7 PCL, Delta Electronics Thai and Ratch Group will replace Bangkok Life Assurance, IRPC PCL, KCE Electronics PCL and Srisawad Power in the SET 50 Index.
Passive trackers will need to buy between 2-4 days of ADV on the adds while selling between 0.6-3 days of ADV on the deletes.
The adds have significantly outperformed the deletes over the last few months. We’d use any big moves over the next couple of days to trim positions.

Northbound Stock Connect Expansion: Potential Changes in 2023

On Monday, the CSRC and the SFC agreed to further deepen mutual stock market access between the Mainland and Hong Kong and promote the development of both capital markets.
For Northbound Stock Connect, the eligible universe has been widely expanded to include constituents of the SSE A Share Index and the SZSE Composite Index.
There are 1,112 stocks that join the eligible universe, and 938 stocks currently meet the criteria for Northbound Stock Connect inclusion. There are implications for inclusion in global indices.

Fengxiang (9977 HK): SPA Completed. Now For The Unconditional MGO

By David Blennerhassett

A little over two months since PAG Capital won the judicial auction to acquire 70.92% of Shandong Fengxiang (9977 HK), the acquisition has now cleared all regulatory clearances, including SAMR.
PAG will now be required to make an unconditional Offer for all H-shares at HK$1.5132/share. Separately, PAG intends to delist Fengxiang which involves Scheme-like delisting resolutions.
This is done. The timing for approving the SPA was bang-on with my expectation.

Good Morning Japan |Shock and Awe – BOJ Sends Ripple Though Markets in Kuroda’s Parting Shot

By Mark Chadwick

OVERSEAS: SPX +0.1%, eakes out gains; BOJ takes the spotlight as Kuroda delivers “SHOCK AND AWE” (or just bad communication); TSLA at 2 year low-we are focused on deliveries
JAPAN: NKY Futs vs Cash -0.9% – mainly due to yen strengthening; BOJ’s change reverberates across markets; Positive 3Q Takashimaya preview positive read for Inbound; Courts support Nuke restarts
DAILY NUGGETS: The BOJ has started on the path towards policy normalisation, SIX MONTHS EARLY. No issues with the move – the shift was poorly communicated, or rather, NOT COMMUNICATED.

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Dec 21

Daily Brief Energy/Materials: Syrah Resources, Kum Yang Co Ltd, SK Innovation and more

By Smartkarma Daily Briefs | Daily Briefs, Energy & Materials Sector

In today’s briefing:

S&P/ASX Quiddity Leaderboard Mar 23: Index Changes Galore
KOSPI 200 Rebalancing Early Preview: Few Names Stand Out
Korea FSC: Official Mandate of Appraisal Rights in Split-Offs & Trading Ramifications

S&P/ASX Quiddity Leaderboard Mar 23: Index Changes Galore

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 run up to the March 2023 Rebalance.
Pendal Group (PDL AU)‘s deletion is expected in early-January 2023 and this could trigger an intra-review addition to the ASX 200 index.
I expect there to be one, two, and four changes, respectively, for the ASX 20, ASX 100, and ASX 200 indices in the March 2023 Rebalance.

KOSPI 200 Rebalancing Early Preview: Few Names Stand Out

One name is screened to newly join the index. That is Kum Yang (001570 KS). With a YTD performance of over 400%, it is currently in very safe territory.
Two constituents stand out as likely deletes at this point: Zinus (013890 KS) and Hwaseung Enterprise (241590 KS). The market cap gap with the next ones in line isn’t small.
Kum Yang’s passive impact is substantially low due to the recent surge in TV. But if it moves sideways and TV stabilizes downward, we should build preemptive flow trade setups.

Korea FSC: Official Mandate of Appraisal Rights in Split-Offs & Trading Ramifications

The exercise price is the arithmetic average of weighted average prices for the past two months, the past month, and the past week from the day before the board resolution.
Considering the governance structure of most local companies, a split-off will still be more likely to be preferred than a spin-off. Split-offs will emerge despite the mandate of appraisal rights.
We should look into staggering spread openings, with the pricing done on a two-month window, as a downward price revision will likely intensify toward the announcement with mandatory appraisal rights.

💡 Before it’s here, it’s on Smartkarma

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✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Dec 21

Daily Brief Industrials: Kawasaki Kisen Kaisha, Beijing-Shanghai High Speed Railway-A, REPT BATTERO Energy and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

KLINE (9107) CEO Comes Out Swinging – More LPG Carriers and More Shareholder Returns THIS YEAR
Northbound Stock Connect Expansion: Potential Changes in 2023
REPT BATTERO Energy Pre-IPO Tearsheet

KLINE (9107) CEO Comes Out Swinging – More LPG Carriers and More Shareholder Returns THIS YEAR

The Nikkei reported this AM that Kawasaki Kisen Kaisha (9107 JP) CEO was considering increasing shareholder returns this fiscal year. It already has a juicy div and a ¥100bn buyback.
The company announced its buyback, and an agreement by two holders of 39% to sell in a ToSTNeT-3 buy, then started buying in the market. Results are impactful.
The shares are up today on this news, though they gave some back after the BOJ news. The outlook for more share price impact is not bad.

Northbound Stock Connect Expansion: Potential Changes in 2023