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Smartkarma Daily Briefs

Dec 21
0

Daily Brief TMT/Internet: Delta Electronics Thai, Adobe Systems and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • SET50 Index Rebalance: CENTEL, COM7, DELTA, RATCH Added; BLA, IRPC, KCE, SAWAD Out
  • TMT Left for Dead Long Ideas: Adobe

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

By Brian Freitas

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. 

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Dec 21
0

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

By | 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

By Travis Lundy

  • 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

By Brian Freitas

  • 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.

REPT BATTERO Energy Pre-IPO Tearsheet

By Clarence Chu

  • REPT BATTERO Energy (REPT HK) is looking to raise US$1bn in its upcoming Hong Kong IPO. The bookrunners on the deal are Morgan Stanley, and Citic Securities.
  • REPT BATTERO Energy (REPT) is a lithium-ion battery manufacturer in China, focusing on R&D, production, and sales of EV/ESS lithium-ion battery products such as battery cells, modules and packs. 
  • As per F&S, it was amongst the top ten lithium-ion battery manufacturers in China as per installations for new energy application in 2021.

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Dec 21
0

Daily Brief Health Care: ClouDr Group, Hanmi Science and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • 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

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
0

Daily Brief Consumer: Xiabuxiabu Catering Mgt Chn Hldgs, Shandong Fengxiang, Bata India Ltd, Match Group Inc, Netflix Inc, Porsche Automobil Holding, Zx Inc and more

By | Consumer, Daily Briefs

In today’s briefing:

  • China Catering Sector: In Search of Alpha
  • Fengxiang (9977 HK): SPA Completed. Now For The Unconditional MGO
  • Fengxiang (9977 HK)’s Share Transfer to PAG Complete, Unconditional MGO
  • India Channel Insight #46 | Bata India, Campus Activewear
  • TMT Left for Dead Long Ideas: Match
  • Netflix AVOD Not Chill
  • Selected European Holdcos and DLC: November/Mid-December‘22 Report
  • Zx Inc Pre-IPO Tearsheet

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.     

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.

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.

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: 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.

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).

Zx Inc Pre-IPO Tearsheet

By Ethan Aw

  • Zx Inc (ZX CH) is looking to raise about US$100m in its upcoming HK IPO. The deal will be run by CICC and China Securities International. 
  • Zx Inc runs three different businesses, namely an interactive entertainment business (Tan Wan), an instant food brand (Zha Zha Hui) and pop toy business (Bro Kooli). 
  • Its interactive entertainment business Tan Wan focuses on publishing game products while while leveraging its precision marketing, in-depth operation and brand incubation capabilities. 

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Dec 21
0

Daily Brief Thailand: Delta Electronics Thai and more

By | Daily Briefs, Thailand

In today’s briefing:

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

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

By Brian Freitas

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Dec 21
0

Daily Brief Australia: Syrah Resources and more

By | Australia, Daily Briefs

In today’s briefing:

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

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. 

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Dec 21
0

Daily Brief South Korea: Kum Yang Co Ltd, SK Innovation, Hanmi Science and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KOSPI 200 Rebalancing Early Preview: Few Names Stand Out
  • Korea FSC: Official Mandate of Appraisal Rights in Split-Offs & Trading Ramifications
  • Korea Biotech & Healthcare: A Pair Trade Between Hanmi Science and Hanmi Pharm

KOSPI 200 Rebalancing Early Preview: Few Names Stand Out

By Sanghyun Park

  • 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

By Sanghyun Park

  • 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.

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
0

Daily Brief United States: Adobe Systems, Match Group Inc, Netflix Inc and more

By | Daily Briefs, United States

In today’s briefing:

  • TMT Left for Dead Long Ideas: Adobe
  • TMT Left for Dead Long Ideas: Match
  • Netflix AVOD Not Chill

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.

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Dec 21
0

Daily Brief India: Bata India Ltd and more

By | Daily Briefs, India

In today’s briefing:

  • India Channel Insight #46 | Bata India, Campus Activewear

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.

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Dec 21
0

Daily Brief Japan: Kawasaki Kisen Kaisha and more

By | Daily Briefs, Japan

In today’s briefing:

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

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

By Travis Lundy

  • 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. 

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