Smartkarma Daily Briefs

Back on 1 March, 51 Job Inc Adr (JOBS US) entered into a revised merger agreement at US$61.00/share, down 22.8% from the initial terms.
This merger was approved at an EGM on the 27 April and became effective on the 6 May.
Court proceedings have commenced for dissenters, accounting for a staggering 30.9% of shares out. It’s not just “fair value” under the microscope; but the legality of the downward revision.

Zhuangyuan Pasture (1533 HK): Offer Now Unconditional

On the 25 April, PRC dairy farmer Lanzhou Zhuangyuan Pasture (1533 HK) announced a Conditional Cash Offer for all its H-shares at $10.89/share.
This two-step voluntary cash offer incorporated a Scheme-like vote and a 90% tendering condition.
Shareholders voted for the transaction on the 29 June. The tendering condition has now been satisfied. The last day of trading is on the 1 August.

Shanghai/Shenzhen Northbound Connect: Weekly Moves (22 July 2022)

Inside is a recap of movements in the last week relating to the Hong Kong Stock Exchange -Shanghai and Shenzhen Northbound Connect facilities, broken down by company and industry.
Overall, net outflow over the past week was ~US$1.83bn, split between Shanghai (-US$1.3bn) and Shenzhen (-US$0.5bn).
The largest inflows were into Yunnan Chuangxin New (002812 CH) and Shanghai Baosight (600845 CH). The largest outflows were in Sungrow Power (300274 CH) and Ping An Bank (000001 CH).

Shanghai/Shenzhen Southbound Connect: Weekly Moves (22 July 2022)

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, the net inflow over the past week was ~US$0.46bn, split (+US$0.36bn) for Shanghai and (+US$0.1bn) for Shenzhen.
The largest inflows were into Tencent (700 HK) and BYD (1211 HK). The largest outflow was in Pop Mart International Group Limited (9992 HK) and Great Wall Motor (2333 HK).

Chinese Property Weekly – 22 July 2022 – Lucror Analytics

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 – 22 July 2022 – Lucror Analytics

FactSet Research Systems Inc.: Defensive Business Model & Key Drivers, Major Competitive Threats & Other Risks, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)

FactSet has a fundamentally solid business model and its business has not been significantly affected despite the bearish trends in the S&P500.
Asia Pacific continued to be a growth-driving geography with ASV growth at 14.3%, driven by demand from asset managers and vested owners.
With greater expansion with asset owners and asset managers, respectively, both CTS and analytics contributed to growth.

Weekly Wrap – 22 Jul 2022

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:

and more…

Weekly Wrap – 22 Jul 2022

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:

and more…

CarMax Inc: Digital Platform Upside, Marketing & New Sponsorships, Other Key Drivers, inancial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)

CarMax had a decent start to the 2023 fiscal and generated total sales of $9.3 billion in the first quarter, up 21% from the previous year’s period.
Total unit sales in their retail division fell by 11% in the first quarter, and used unit comps dropped by 12.7% from the same period in 2017.
The same broad macroeconomic factors that contributed to a market-wide decline in used car sales during the quarter drove CarMax’s performance.

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Jul 23

Daily Brief Singapore: Carmax Inc, Carnival Corp, FedEx Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Singapore

In today’s briefing:

CarMax Inc: Digital Platform Upside, Marketing & New Sponsorships, Other Key Drivers, inancial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)
Carnival Corporation: Market Position, Resumption Update & Key Drivers, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)
FedEx Corporation: Partnership With Boxed, Business Strategy & Key Drivers, inancial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)

CarMax Inc: Digital Platform Upside, Marketing & New Sponsorships, Other Key Drivers, inancial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)

CarMax had a decent start to the 2023 fiscal and generated total sales of $9.3 billion in the first quarter, up 21% from the previous year’s period.
Total unit sales in their retail division fell by 11% in the first quarter, and used unit comps dropped by 12.7% from the same period in 2017.
The same broad macroeconomic factors that contributed to a market-wide decline in used car sales during the quarter drove CarMax’s performance.

Carnival Corporation: Market Position, Resumption Update & Key Drivers, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)

Carnival Corporation continued its recovery story from the pandemic and delivered a decent quarterly result by restarting 20 more ships, using 74% of its fleet’s capacity for guest cruise operations throughout the entire period.
The company currently operates guest cruises with 91% of its fleet’s capacity which is a very positive sign.
Regarding the ships in operation, occupancy for the second quarter was 69%, a significant improvement over the first quarter’s 54%.

FedEx Corporation: Partnership With Boxed, Business Strategy & Key Drivers, inancial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)

FedEx ended the 2022 fiscal year with its highest-ever revenue of $93.5 billion and adjusted operating income of $6.9 billion, both up 11% year over year, in the face of an increasingly difficult global backdrop.
After a successful turnaround effort, the company has been enjoying the fruits of a successful long-term strategy.
In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

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Jul 23

Daily Brief Thailand: True Corp Pcl and more

By Smartkarma Daily Briefs | Daily Briefs, Thailand

In today’s briefing:

DTAC/True Merger: Shares Decline on Noise About NBTC Subcommittees Voting Decision

DTAC/True Merger: Shares Decline on Noise About NBTC Subcommittees Voting Decision

By Arun George

Total Access Communication (DTAC TB) and True Corp Pcl (TRUE TB) shares declined as reports suggest that NBTC’s subcommittees voted 3:1 AGAINST the merger. True said the reports are false.
An earlier press conference by CP Group and Telenor ASA (TEL NO) reiterated that the NBTC could only prescribe remedial measures. A court ruling on 16 June supports this view.
NBTC will allegedly review the subcommittees’ findings on 26-27 July. We think this development results in the NBTC prescribing harsher remedial conditions to the merger rather than blocking it.

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Jul 23

Daily Brief Japan: NTT (Nippon Telegraph & Telephone), Tokyo Stock Exchange Tokyo Price Index Topix and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

NTT (Buy) – Some Quick Takeaways from the Subsea Cable Announcement
Simply Returning Profits to Shareholders Will Increase Gap in Valuations Among Companies

NTT (Buy) – Some Quick Takeaways from the Subsea Cable Announcement

By Kirk Boodry

NTT announced it would build and operate a third trans-Pacific subsea cable (JUNO) with NEC as the vendor and a 2024 activation date
This also represents the second trans-Pacific cable in five years and the one with the highest capacity to date
This is not core to NTT’s business but it does highlight how capacity needs are expanding as network speeds accelerate and how those costs can be managed

Simply Returning Profits to Shareholders Will Increase Gap in Valuations Among Companies

By Aki Matsumoto

It can be said that companies that do not specify cash allocation and only execute shareholder return, thus encouraging shareholders to find and invest in reinvestment targets on their own.
Since the stock valuations of companies as a whole haven’t increased, investment capital has gone to a few companies with high profitability, raising gap between profitability and valuations among companies.
If the information asymmetry between management and investors could be bridged, even changes in the capital structure could have an impact on stock prices.

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Jul 23

Daily Brief India: Ishares Global Consumer Disc and more

By Smartkarma Daily Briefs | Daily Briefs, India

In today’s briefing:

Positive Signals; Growth Sectors Gaining Momentum; Buy Ideas Within Global Growth Sectors

Positive Signals; Growth Sectors Gaining Momentum; Buy Ideas Within Global Growth Sectors

By Joe Jasper

We are seeing some positive signals that suggest the lows for this bear market may have already been established, or at the very least, that downside is limited from here.
Still, YTD downtrends remain intact on the global MSCI equity indexes, and we need to see reversals of their downtrends in order to get more constructive at the index level.
Cyclical Growth Sectors continue to gain momentum and we are upgrading the MSCI ACWI Technology, Consumer Discretionary, and Communication Services Sectors from underweight to market weight. Add exposure.

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Jul 23

Most Read: KMW Co Ltd, Hitachi Transport System, Kotak Mahindra Bank, Xtep International, Link Administration, Zomato, 51 Job Inc Adr, Lanzhou Zhuangyuan Pasture, Nordex SE and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

KRX New Deal Index Rebalance Preview: KMW Into BBIG to Drive Flows
Hitachi Transport (9086 JP): STILL Trading Too Wide
Kotak Mahindra Bank (KMB IN): FTSE Inclusion Likely; Flows Will Be Staggered
Xtep International Placement – Parent Trimming at ATHs, Last Deal Didn’t Do Well
Link and DND Shake Hands at A$4.81
Zomato IPO Lock-Up – A US$3.4bn Lockup Release Test Case for India
51job’s Egregious Offer: Dissentient Shareholders Commence Court Proceedings
Zhuangyuan Pasture (1533 HK): Offer Now Unconditional
DAX/MDAX/SDAX Quiddity Leaderboard Sep 2022: Some Changes for SDAX and MDAX
Cross Markets: Is the Ship Turning?

KRX New Deal Index Rebalance Preview: KMW Into BBIG to Drive Flows

By Brian Freitas

The review period for the September rebalance of the KRX New Deal indices started on 1 May and will run till 29 July. Implementation is on 8 September.
Intellian Technologies (189300 KS) and Seojin System Co, Ltd. (178320 KS) could replace Danal Co Ltd (064260 KS) and Kcp Co Ltd (060250 KS) in the Internet Index.
Nexon Games (225570 KS) could replace Devsisters (194480 KS) in the Game Index, and KMW Co Ltd (032500 KS) could replace AfreecaTV (067160 KS) in the BBIG Index.

Hitachi Transport (9086 JP): STILL Trading Too Wide

By Travis Lundy

Overnight we got news that the EU had cleared the purchase of Hitachi Transport System (9086 JP) by the KKR bidco.
What started as an expected five-month process to gain regulatory clearances should now be down to two months. Risk arb is trading wide, but this is an “easy” deal.
Now trading at 10% annualised to the cash-out date implied by a 30-Sep start date, this is a “good risk.”

Kotak Mahindra Bank (KMB IN): FTSE Inclusion Likely; Flows Will Be Staggered

By Brian Freitas

Kotak Mahindra Bank (KMB) was deleted from the FTSE All-World Index following the introduction of the minimum headroom rule. With foreign room below 20%, the stock was not added back.
The latest shareholding pattern as of 30 June shows foreign room at 20.01%. This means that Kotak Mahindra Bank (KMB IN) should be added to the index in September.
However, the inclusion will take place in a staggered manner. Subject to foreign room staying above 20%, the inflows will come over the next couple of years.

Xtep International Placement – Parent Trimming at ATHs, Last Deal Didn’t Do Well

By Clarence Chu

Group Success Investments is looking to raise up to US$133m by trimming its holdings in Xtep International (1368 HK).
We can’t say that the deal is expected and short interest on the stock hasn’t been creeping up as well.
While the deal won’t be a large one, representing just 5.7 days of three month ADV, the firm’s last deal hasn’t done well.

Link and DND Shake Hands at A$4.81

By Arun George

Link Administration (LNK AU) has entered a revised scheme implementation deed with Dye&Durham/DND at A$4.81 per share. The scheme meeting will be held in mid-August.
Shareholders will be supportive due to deal fatigue, and the offer price is 11% above the undisturbed price and at the low end of the original IE valuation range.
Regulatory approvals are a key risk. DND is presumably confident in its undertakings to gain ACCC approval. At last close, the gross spread is 7.8%.

Zomato IPO Lock-Up – A US$3.4bn Lockup Release Test Case for India

By Sumeet Singh

Zomato (Zomato IN) raised US$1.3bn in its India IPO in Jul 2021. At that time, it was the largest technology sector listing in India.
Zomato is one of two leading food delivery app operators in India. It recently acquired Blinkit marking its foray into the instant grocery segment.
In this note, we will talk about the lock-up dynamics and updates since our last note.

51job’s Egregious Offer: Dissentient Shareholders Commence Court Proceedings

Back on 1 March, 51 Job Inc Adr (JOBS US) entered into a revised merger agreement at US$61.00/share, down 22.8% from the initial terms.
This merger was approved at an EGM on the 27 April and became effective on the 6 May.
Court proceedings have commenced for dissenters, accounting for a staggering 30.9% of shares out. It’s not just “fair value” under the microscope; but the legality of the downward revision.

Zhuangyuan Pasture (1533 HK): Offer Now Unconditional

On the 25 April, PRC dairy farmer Lanzhou Zhuangyuan Pasture (1533 HK) announced a Conditional Cash Offer for all its H-shares at $10.89/share.
This two-step voluntary cash offer incorporated a Scheme-like vote and a 90% tendering condition.
Shareholders voted for the transaction on the 29 June. The tendering condition has now been satisfied. The last day of trading is on the 1 August.

DAX/MDAX/SDAX Quiddity Leaderboard Sep 2022: Some Changes for SDAX and MDAX

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the names leading the race to become ADDs/DELs for the DAX, MDAX, and SDAX Indices for the September 2022 Rebalance.
While no names currently satisfy the requirements to move into or out of the DAX Index, there could be some changes for the MDAX and SDAX Index.
Below is a closer look at the recent price and volume performance of these names.

Cross Markets: Is the Ship Turning?

By Shyam Devani

Is the inflation ship turning? Price action in markets warrants this question
The clearest breaks have been in US stocks which should still rally
Bonds may be the next to move – it is the central market to watch

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Jul 23

Daily Brief Financials: Agile Property Holdings, Grupo Financiero Banorte, Kwg Property Holding and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Chinese Property Weekly – 22 July 2022 – Lucror Analytics
Banorte – Shareholders Would Be Better off Without Banamex
Weekly Wrap – 22 Jul 2022

Chinese Property Weekly – 22 July 2022 – Lucror Analytics

Banorte – Shareholders Would Be Better off Without Banamex

By Victor Galliano

We continue to believe that Banorte is one of the main potential acquirers of Banamex; CitiBanamex’s opex and credit quality metrics worsened to May, making the acquisition more challenging
Banorte’s 2Q22 results include a reduced core capital ratio post dividend payments which, in the event of a Banamex acquisition, increases the risk of an approximately USD1bn capital raise
Furthermore, AMLO’s latest pronouncements on the Banamex sale – which include that there should be no mass lay-offs – threaten to limit the acquiring bank’s scope to extract merger synergies

Weekly Wrap – 22 Jul 2022

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:

and more…

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

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

Jul 23

Daily Brief TMT/Internet: True Corp Pcl, NTT (Nippon Telegraph & Telephone), Factset Research Systems Inc, Accenture Plc Cl A and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

DTAC/True Merger: Shares Decline on Noise About NBTC Subcommittees Voting Decision
NTT (Buy) – Some Quick Takeaways from the Subsea Cable Announcement
FactSet Research Systems Inc.: Defensive Business Model & Key Drivers, Major Competitive Threats & Other Risks, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)
Accenture Plc: Continued Bolt-On Acquisitions Strategy & Other Drivers, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)

DTAC/True Merger: Shares Decline on Noise About NBTC Subcommittees Voting Decision

By Arun George

Total Access Communication (DTAC TB) and True Corp Pcl (TRUE TB) shares declined as reports suggest that NBTC’s subcommittees voted 3:1 AGAINST the merger. True said the reports are false.
An earlier press conference by CP Group and Telenor ASA (TEL NO) reiterated that the NBTC could only prescribe remedial measures. A court ruling on 16 June supports this view.
NBTC will allegedly review the subcommittees’ findings on 26-27 July. We think this development results in the NBTC prescribing harsher remedial conditions to the merger rather than blocking it.

NTT (Buy) – Some Quick Takeaways from the Subsea Cable Announcement

By Kirk Boodry

NTT announced it would build and operate a third trans-Pacific subsea cable (JUNO) with NEC as the vendor and a 2024 activation date
This also represents the second trans-Pacific cable in five years and the one with the highest capacity to date
This is not core to NTT’s business but it does highlight how capacity needs are expanding as network speeds accelerate and how those costs can be managed

FactSet Research Systems Inc.: Defensive Business Model & Key Drivers, Major Competitive Threats & Other Risks, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)

FactSet has a fundamentally solid business model and its business has not been significantly affected despite the bearish trends in the S&P500.
Asia Pacific continued to be a growth-driving geography with ASV growth at 14.3%, driven by demand from asset managers and vested owners.
With greater expansion with asset owners and asset managers, respectively, both CTS and analytics contributed to growth.

Accenture Plc: Continued Bolt-On Acquisitions Strategy & Other Drivers, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)