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Smartkarma Daily Briefs

Jul 09
0

Most Read: Hang Seng China Enterprises Index, Baidu, Asmedia Technology, Giordano International, WCP and more

By | Daily Briefs, Most Read

In today’s briefing:

  • HSCEI Index Rebalance: Bilibili Replaces Sunac Next Week
  • HSI Index Rebalance Preview: Finding the Balance
  • FTSE TWSE Taiwan Dividend+ Index: A Rare Gem for Index Rebal Trades
  • Giordano (709 HK): Cheng Family’s Offer (Even) Less Viable After Positive Profit Alert
  • WCP IPO Preview

HSCEI Index Rebalance: Bilibili Replaces Sunac Next Week

By Brian Freitas

HSI Index Rebalance Preview: Finding the Balance

By Brian Freitas

  • Currently at 69 constituents, it is unlikely that we reach 80 member by year end. Hang Seng Indexes is finding it tough to reach the target by excluding unprofitable companies.
  • We list 11 stocks that could be added to the index in September – with one-way turnover just over 5%, the actual number of inclusions will be lower.
  • There are a few potential inclusions where short interest is over 5% of the free float. These stocks could see short covering ahead of announcement of the changes.

FTSE TWSE Taiwan Dividend+ Index: A Rare Gem for Index Rebal Trades

By Janaghan Jeyakumar, CFA

  • The FTSE TWSE Taiwan Dividend+ Index is an index of stocks with the highest dividend yields in the universe of the FTSE TWSE Taiwan 50 and Mid-Cap 100 Indices.
  • According to our estimates, the historical average return for index rebalance trades seems to be extremely attractive and the potential volume impact can be significant too.
  • We feel this is one of the most interesting esoteric indices in the Asia-Pacific region for index rebalance trades.

Giordano (709 HK): Cheng Family’s Offer (Even) Less Viable After Positive Profit Alert

By David Blennerhassett

  • After the close of trading yesterday, Giordano International (709 HK)  announced a positive  profit alert
  • Giordano expects an interim net profit of HK$91mn-HK$101mn, a 52%-68% increase over the corresponding period.
  • The Cheng family’s HK$1.88/share Offer was low-balled from the onset. Substantial shareholder David Webb agrees. This deal is dead without a bump.

WCP IPO Preview

By Douglas Kim

  • WCP is getting ready for an IPO in Korea in August. This is expected to be one of the largest IPOs in Korea post LG Energy Solution (373220 KS).
  • The IPO price range is from 80,000 won to 100,000 won. The IPO base deal size is from $560 million to $700 million.
  • WCP is a leading maker of separators which are key materials used in EV batteries.

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Jul 09
0

Thailand: Sri Trang Gloves (Thailand) Public Company Limited and more

By | Daily Briefs, Thailand

In today’s briefing:

  • Sri Trang Gloves (STGT TB): 2022 Started On a Weak Note; Lower ASP Is Industry Wide Phenomena

Sri Trang Gloves (STGT TB): 2022 Started On a Weak Note; Lower ASP Is Industry Wide Phenomena

By Tina Banerjee

  • Sri Trang Gloves (Thailand) Public Company Limited (STGT TB) reported record high sales volume due to strong demand in existing markets and expansion into new markets.
  • However, lower ASP as a result of additional supply in the market, dragged down revenue and profitability of the company. No recovery in ASP is seen in near-term.
  • By leveraging on its locational advantage for NR glove, focusing on fast growing developing markets, and launching high-margin surgical glove in Thailand, STGT is well-positioned to outpace its Malaysian peers.

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Jul 09
0

Industrials: Carter’s Inc and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Palm Valley Capital Fund Second Quarter 2022 Commentary

Palm Valley Capital Fund Second Quarter 2022 Commentary

By Fund Newsletters

  • The Palm Valley Capital Fund invests in small cap stocks. While our Fund is new, its underlying absolute return-based investment strategy is not. We have practiced the same strategy throughout our careers in investment management.
  • Investors’ faith in central banks is currently being tested by the highest U.S. inflation in over 40 years.
  • Two-thirds of the nonfinancial members in the Russell 2000 Index are either unprofitable or trade above 20x EV/EBIT.
  • The median EBIT growth since 2019 for small caps in the sub 10x EV/EBIT bucket is an astonishing 194%.
  • Small caps didn’t sell off enough to create compelling opportunities across the board and the market simply unwound its undeserved gains from 2021.

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Jul 09
0

Health Care: Sri Trang Gloves (Thailand) Public Company Limited and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Sri Trang Gloves (STGT TB): 2022 Started On a Weak Note; Lower ASP Is Industry Wide Phenomena

Sri Trang Gloves (STGT TB): 2022 Started On a Weak Note; Lower ASP Is Industry Wide Phenomena

By Tina Banerjee

  • Sri Trang Gloves (Thailand) Public Company Limited (STGT TB) reported record high sales volume due to strong demand in existing markets and expansion into new markets.
  • However, lower ASP as a result of additional supply in the market, dragged down revenue and profitability of the company. No recovery in ASP is seen in near-term.
  • By leveraging on its locational advantage for NR glove, focusing on fast growing developing markets, and launching high-margin surgical glove in Thailand, STGT is well-positioned to outpace its Malaysian peers.

Before it’s here, it’s on Smartkarma

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Jul 09
0

Japan: Shiga Bank, Shift Inc, Z Holdings and more

By | Daily Briefs, Japan

In today’s briefing:

  • JAPAN ACTIVISM:  Silchester Target Shiga Bank Dings the Div Proposal Badly
  • Shift 3Q: Earnings Below Consensus but Heavy Hiring Spend Should Help in the Long Run
  • Z Holdings (Neutral) – PayPay Rebranding of ECommerce; We Remain Cautious in a Rebuilding Year

JAPAN ACTIVISM:  Silchester Target Shiga Bank Dings the Div Proposal Badly

By Travis Lundy

  • In April, Silchester went after Shiga Bank (8366 JP)(JAPAN ACTIVISM:  Silchester Goes After Shiga Bank), with an open letter decrying destruction of shareholder value, asking for a special dividend. 
  • They said Shiga Bank had excess cross-holdings and perennially low ROE (it does). Silchester asked for a minimal special div as a signal. Shareholders dinged their request at the AGM. 
  • Shiga Bank had a decent runup in the last several months – far outstripping its peers. Now it is rich. Time to take the trade off.

Shift 3Q: Earnings Below Consensus but Heavy Hiring Spend Should Help in the Long Run

By Shifara Samsudeen, ACMA, CGMA

  • Shift reported 3QFY08/2022 results yesterday. Revenue grew 36.1% YoY to JPY17.1bn (vs consensus JPY18.3bn) while OP grew 25.7% to JPY1.3bn (vs consensus JPY1.54bn).
  • Revenue from the largest segment Enterprise market grew 35.3% while enterprise segment grew 47.5% YoY during the quarter.
  • According to Shift, the application of revenue recognition standard has lowered revenues and OP. The drop in OPM was due to heavy SG&A expenses as a result of hiring.

Z Holdings (Neutral) – PayPay Rebranding of ECommerce; We Remain Cautious in a Rebuilding Year

By Kirk Boodry

  • Z Holdings will integrate its eCommerce platforms in a move that boosts the PayPay brand and may generate some (very) modest synergies
  • We are publishing updated forecasts and setting a new target price at ¥550 but we remain cautious on the shares in the near term as consensus remains high
  • Shares of ZHD still appear expensive at 14-16x our estimate of FY22e EBITDA and are more expensive than Alphabet at these levels (12x EBITDA)

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Jul 09
0

Financials: Noah Holdings, Shiga Bank, Dollar Index and more

By | Daily Briefs, Financials

In today’s briefing:

  • Noah Holdings: Rich Pickings but Patience Required
  • Noah Holdings: A Solid Takeout Candidate as the Largest Independent Wealth Mgmt Provider in China
  • JAPAN ACTIVISM:  Silchester Target Shiga Bank Dings the Div Proposal Badly
  • EM and Asian FX Break Points that Will Inflect Risk

Noah Holdings: Rich Pickings but Patience Required

By Arun George

  • Noah Holdings (NOAH US) priced its H Share at HK$292.00 per share (US$18.60 per ADS) to raise gross proceeds of US$41 million. The H Share will trade on 13 July. 
  • The H Share listing is primarily to address the risk of a potential US delisting. With cash accounting for around 50% of the market cap, Noah is well capitalised. 
  • The valuation is attractive for a company well-positioned to take advantage of any improving market sentiment and an easing of the risk-off sentiment.

Noah Holdings: A Solid Takeout Candidate as the Largest Independent Wealth Mgmt Provider in China

By Douglas Kim

  • In our view, Noah Holdings is a solid acquisition candidate as the largest independent wealth management services provider in China. 
  • The Chinese regulators made a change to the ETF market to overseas investors via Hong Kong called ETF Connect and this is likely to benefit companies such as Noah. 
  • As China’s financial markets become larger and more liberalized, there will be a premium on companies such as Noah Holdings with leading market share in China’s wealth management services. 

JAPAN ACTIVISM:  Silchester Target Shiga Bank Dings the Div Proposal Badly

By Travis Lundy

  • In April, Silchester went after Shiga Bank (8366 JP)(JAPAN ACTIVISM:  Silchester Goes After Shiga Bank), with an open letter decrying destruction of shareholder value, asking for a special dividend. 
  • They said Shiga Bank had excess cross-holdings and perennially low ROE (it does). Silchester asked for a minimal special div as a signal. Shareholders dinged their request at the AGM. 
  • Shiga Bank had a decent runup in the last several months – far outstripping its peers. Now it is rich. Time to take the trade off.

EM and Asian FX Break Points that Will Inflect Risk

By Thomas Schroeder

  • USD bull energy appears unabated amid yield dips and risk on phases. Red flags are brewing for USD breakout levels in EM and vulnerable FX in Asia.
  • The greenback will find a short term top ahead or into the Fed rate hike. A USD pullback in July/August if viewed as a fresh buying opportunity.
  • We see September/October (will start in August) and Q1 2023 as windows for USD power moves/breakouts that would lead equity risk (bear phases).

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Jul 09
0

United States: Dollar Index, Carter’s Inc and more

By | Daily Briefs, United States

In today’s briefing:

  • EM and Asian FX Break Points that Will Inflect Risk
  • Palm Valley Capital Fund Second Quarter 2022 Commentary

EM and Asian FX Break Points that Will Inflect Risk

By Thomas Schroeder

  • USD bull energy appears unabated amid yield dips and risk on phases. Red flags are brewing for USD breakout levels in EM and vulnerable FX in Asia.
  • The greenback will find a short term top ahead or into the Fed rate hike. A USD pullback in July/August if viewed as a fresh buying opportunity.
  • We see September/October (will start in August) and Q1 2023 as windows for USD power moves/breakouts that would lead equity risk (bear phases).

Palm Valley Capital Fund Second Quarter 2022 Commentary

By Fund Newsletters

  • The Palm Valley Capital Fund invests in small cap stocks. While our Fund is new, its underlying absolute return-based investment strategy is not. We have practiced the same strategy throughout our careers in investment management.
  • Investors’ faith in central banks is currently being tested by the highest U.S. inflation in over 40 years.
  • Two-thirds of the nonfinancial members in the Russell 2000 Index are either unprofitable or trade above 20x EV/EBIT.
  • The median EBIT growth since 2019 for small caps in the sub 10x EV/EBIT bucket is an astonishing 194%.
  • Small caps didn’t sell off enough to create compelling opportunities across the board and the market simply unwound its undeserved gains from 2021.

Before it’s here, it’s on Smartkarma

Learn More
Jul 09
0

India: Haier Smart Home Co Ltd and more

By | Daily Briefs, India

In today’s briefing:

  • India Channel Insight #41 | Haier, Samsung, Voltas

India Channel Insight #41 | Haier, Samsung, Voltas

By Pranav Bhavsar

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Jul 09
0

Macro: So and more

By | Daily Briefs, Macro

In today’s briefing:

  • So, Recession?
  • July Market Thinking

So, Recession?

By The Macro Compass

  • Amongst the many forward-looking economic indicators I focus on, you will know by now that one of my preferred metrics is my G5 Credit Impulse series: it measures the pace of change of credit creation in the 5 largest economies worldwide and it serves as a very reliable leading indicator (6-15 months lead time) for economic growth and the performance of several asset classes.
  • Why? Because as our structural ability to deliver economic growth is impaired by weak demographics and stagnant productivity, we learnt that printing money out of thin air works as a (temporary) substitute: the more money we inject in the private sector, the more likely we’ll get a cyclical boost to economic growth.
  • Slow down that process, and growth will cyclically slow down too.

July Market Thinking

By Mark Tinker

  • June ended with one of the worst first half performances for capital markets for decades, representing a serious blow to wealth in that both Bonds and Equities have been hit badly.
  • We continue to believe that the underlying stress is coming from fixed income markets, which remain the key area to watch as they unwind the excess liquidity pumped into them over a decade of QE and more recently at the start of Covid, when the Fed had to inject liquidity to prevent a run on the whole fixed income ETF complex.
  • At the end of May/beginning of June we saw a few signs of stabilisation only to see them unwind rapidly in the first half of the month.

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Jul 09
0

Equity Bottom-Up: Haier Smart Home Co Ltd, Nexteer Automotive, Sri Trang Gloves (Thailand) Public Company Limited, Shift Inc, Z Holdings and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • India Channel Insight #41 | Haier, Samsung, Voltas
  • Nexteer (1316): Unjustly Punished and Bounce Soon?
  • Sri Trang Gloves (STGT TB): 2022 Started On a Weak Note; Lower ASP Is Industry Wide Phenomena
  • Shift 3Q: Earnings Below Consensus but Heavy Hiring Spend Should Help in the Long Run
  • Z Holdings (Neutral) – PayPay Rebranding of ECommerce; We Remain Cautious in a Rebuilding Year

India Channel Insight #41 | Haier, Samsung, Voltas

By Pranav Bhavsar

Nexteer (1316): Unjustly Punished and Bounce Soon?

By Henry Soediarko

  • Nexteer Automotive (1316 HK) share price fell 50% in Q1 22 due to the China lockdown scare although it has manufacturing facilities all over the world. 
  • It traded below book value at some point and rallied alongside other Chinese names in the past month to currently at book value. 
  • Most of the new business won is from EV OEMs thus the company deserves a higher multiple given the high growth in the EV sector. 

Sri Trang Gloves (STGT TB): 2022 Started On a Weak Note; Lower ASP Is Industry Wide Phenomena

By Tina Banerjee

  • Sri Trang Gloves (Thailand) Public Company Limited (STGT TB) reported record high sales volume due to strong demand in existing markets and expansion into new markets.
  • However, lower ASP as a result of additional supply in the market, dragged down revenue and profitability of the company. No recovery in ASP is seen in near-term.
  • By leveraging on its locational advantage for NR glove, focusing on fast growing developing markets, and launching high-margin surgical glove in Thailand, STGT is well-positioned to outpace its Malaysian peers.

Shift 3Q: Earnings Below Consensus but Heavy Hiring Spend Should Help in the Long Run

By Shifara Samsudeen, ACMA, CGMA

  • Shift reported 3QFY08/2022 results yesterday. Revenue grew 36.1% YoY to JPY17.1bn (vs consensus JPY18.3bn) while OP grew 25.7% to JPY1.3bn (vs consensus JPY1.54bn).
  • Revenue from the largest segment Enterprise market grew 35.3% while enterprise segment grew 47.5% YoY during the quarter.
  • According to Shift, the application of revenue recognition standard has lowered revenues and OP. The drop in OPM was due to heavy SG&A expenses as a result of hiring.

Z Holdings (Neutral) – PayPay Rebranding of ECommerce; We Remain Cautious in a Rebuilding Year

By Kirk Boodry

  • Z Holdings will integrate its eCommerce platforms in a move that boosts the PayPay brand and may generate some (very) modest synergies
  • We are publishing updated forecasts and setting a new target price at ¥550 but we remain cautious on the shares in the near term as consensus remains high
  • Shares of ZHD still appear expensive at 14-16x our estimate of FY22e EBITDA and are more expensive than Alphabet at these levels (12x EBITDA)

Related tickers: Nexteer Automotive (1316.HK), Shift Inc (3697.T), Z Holdings (4689.T)

Before it’s here, it’s on Smartkarma

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