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Smartkarma Daily Briefs

Dec 11
0

Daily Brief China: Hong Kong Hang Seng Index, Acotec Scientific Holdings, Tencent, China Traditional Chinese Medicine, Country Garden Services Holdings and more

By | China, Daily Briefs

In today’s briefing:

  • EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
  • Acotec Scientific Holdings (6669 HK): Base Business, Geography Expansion, New Launch to Drive Growth
  • ECM Weekly (11th Dec 2022) – ITail, Sunshine, Weilong, VinFast, Skymark, Tian Tu, Cntry Gard, Nippon
  • (Mostly) Asia-Pac Weekly Risk Arb Wrap: Xingda, Nitro, Chip Eng Seng, Traditional Chinese Medicine
  • Acotec Scientific Holdings (6669.HK) – A Game Changer with Solid Long-Term Logic
  • Hong Kong CEO & Director Dealings (9 Dec): Hopefluent, Matrix, Country Garden Services

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades

By Simon Harris

  • Weekly summary of vol changes and moves across Global Markets
  • Analysing ATM volatility and skew changes over the last 5 days
  • We suggest a few trades to take advantage of the implied vol surfaces

Acotec Scientific Holdings (6669 HK): Base Business, Geography Expansion, New Launch to Drive Growth

By Tina Banerjee

  • Acotec Scientific Holdings (6669 HK) is an early-mover in peripheral drug coated balloon market in China and holds a dominant 85%+ market share.  
  • On November 7, Acotec received its first FDA approval for Vericor, a peripheral support catheter designed to enhance access to peripheral vessels.
  • Acotec started 2022 on a strong note, with revenue increasing 25% y/y in H1 2022 due to increasing adoption of the company’s product in Chinese hospitals.

ECM Weekly (11th Dec 2022) – ITail, Sunshine, Weilong, VinFast, Skymark, Tian Tu, Cntry Gard, Nippon

By Sumeet Singh

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Xingda, Nitro, Chip Eng Seng, Traditional Chinese Medicine

By David Blennerhassett

Acotec Scientific Holdings (6669.HK) – A Game Changer with Solid Long-Term Logic

By Xinyao (Criss) Wang

  • The peripheral vascular interventional device market in China is mainly dominated by foreign companies, but leading domestic company such as Acotec is the one to break the current market pattern.
  • With more products getting CE/FDA approval in the future, Acotec Scientific Holdings (6669 HK) is able to enter more overseas markets. Acotec’s globalization process will diversify the revenue stream. 
  • Acotec has turned loss into profit by relying on product revenue. The Company has entered a new stage of innovation and harvest. We think Acotec has solid long term logic. 

Hong Kong CEO & Director Dealings (9 Dec): Hopefluent, Matrix, Country Garden Services

By David Blennerhassett

  • The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
  • Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. However, such disclosures are by no means an absolute.
  • These insights may flag those companies where shares have been pledged. Stocks mentioned include Hopefluent Group (733 HK), Matrix Holdings (1005 HK), Country Garden Services Holdings (6098 HK).

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Dec 11
0

Daily Brief United States: USD and more

By | Daily Briefs, United States

In today’s briefing:

  • USD Low Gels Dec Risk Peak

USD Low Gels Dec Risk Peak

By Thomas Schroeder

  • We have outlined our bullish DXY zone at 103 but what if the dollar front runs a bull turn as the bulk of near-term yield weakness is baked in.
  • USD lows versus Asian FX shows the ability to turn USD bullish early.
  • SPX rise off of 3,900 pivot support after cracking RSI and price wedge supports a concern if we cannot muster a near term reaction rise.

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Dec 11
0

Daily Brief Japan: Toshiba Corp, Softbank Group, Hamamatsu Photonics Kk and more

By | Daily Briefs, Japan

In today’s briefing:

  • Weekly Deals Digest (11 Dec) – Toshiba, Bigtincan, Nitro, Warrego, Xingda, VinFast, Weilong
  • Last Week in Event SPACE: JAFCO, Jardine Cycle, Softbank, Star Health
  • Hamamatsu Photonics (6965 JP): Earning Momentum Fading

Weekly Deals Digest (11 Dec) – Toshiba, Bigtincan, Nitro, Warrego, Xingda, VinFast, Weilong

By Arun George

Last Week in Event SPACE: JAFCO, Jardine Cycle, Softbank, Star Health

By David Blennerhassett

  • In principle, Jafco Co Ltd (8595 JP) still wants to be greenmailed to get Murakami-san out. 
  • Jardine Cycle & Carriage (JCNC SP)i is expensive here – relative to historical values –  and from an implied stub perspective. And the MSCI inclusion event has now passed.
  • If you think this is a “risk”, then you want to be long when the discount is wide and Softbank Group (9984 JP) is monetising assets in some way. 

Hamamatsu Photonics (6965 JP): Earning Momentum Fading

By Scott Foster

  • As expected, FY Sep-22 results were ahead of guidance. Management is forecasting further growth this fiscal year, but guiding for a YoY decline in operating profit in 2H.
  • In addition, the depreciation of the yen, which added 5% to sales at 17% to operating profit last fiscal year, has reversed, economies have weakened and interest rates are up.
  • We continue to recommend profit taking. We would like to buy the shares at ¥6,000 – 15% down from the Dec. 9 close. 

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Dec 10
0

Daily Brief ESG: Dish TV: Finale Still Awaits and more

By | Daily Briefs, ESG

In today’s briefing:

  • Dish TV: Finale Still Awaits
  • Going Private Is an Option for Both the Companies and Investors

Dish TV: Finale Still Awaits

By Nitin Mangal

  • Dish TV India (DITV IN) has been under the limelight for quite a while. ever since the legal tussle with shareholders.
  • The last six months have seen several events happening at the corporate governance level; the trials of churn in board and the required shareholders approvals has troubled the company.
  • Even though there have been monumental changes in the board such as resignation of Mr.Goel, the battle with the shareholders is still far from the finale.

Going Private Is an Option for Both the Companies and Investors

By Aki Matsumoto

  • While it’s natural for a rational investor to disagree with a company that cannot generate a return commensurate with the risk, the existence of cross-shareholdings in Japanese companies complicates matters.
  • The benefit of listing is raising capital on favorable terms by trading shares at a value greater than shareholders’ equity, but there are not many Japanese companies trading at premium.
  • Going private is one option for companies that are unable to find growth investment opportunities and accumulate cash on their balance sheets. In this regard, Japanese equities are of interest.

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Dec 10
0

Daily Brief Credit: Chinese Property Weekly – 09 December 2022 – Lucror Analytics and more

By | Credit, Daily Briefs

In today’s briefing:

  • Chinese Property Weekly – 09 December 2022 – Lucror Analytics
  • Medco Energi – Tear Sheet – Lucror Analytics
  • Weekly Wrap – 09 Dec 2022

Chinese Property Weekly – 09 December 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.

Medco Energi – Tear Sheet – Lucror Analytics

By Leonard Law, CFA

We view Medco Energi as “High Risk” on the LARA scale, owing to its limited size, somewhat short 1P and 2P reserve life, appetite for acquisitions, and moderate (albeit improving) leverage. The company has a history of negative FCF generation, due to acquisitions and heavy exploratory capex to increase reserve life. In addition, Medco’s earnings are exposed to oil-price volatility, though the risks are mitigated to a degree by its heavy use of fixed-price gas contracts. Positively, production cash costs are low, which reduces the break-even price. The company also appears to have good access to financing from domestic banks, as well as bond and equity markets.

Our fundamental Credit Bias on Medco is “Stable”. This is due to the continued high oil-price environment, which should support earnings and cash flow. Leverage has improved significantly since FY 2021. That said, we are cautious on the possibility of a substantial increase in the company’s capex over the next few years, or another significant debt-funded acquisition that could weaken its financial profile. Over the medium term, the credit profile should remain driven by the development of oil prices.

Controversies are “Immaterial”. While Medco is in the fossil fuel industry, we note that its O&G business segment is more heavily involved in natural gas, which has a lower carbon footprint than crude oil and coal. We expect gas demand to be well-supported over the next decade in the company’s key markets (Indonesia and Southeast Asia), as the region transitions away from coal. The company is also involved in renewable energy, which accounts for c. 30% of installed capacity for its power business. Overall, we view the ESG Impact on Credit as “Neutral”.

Weekly Wrap – 09 Dec 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. China SCE
  2. Hopson Development
  3. Sino-Ocean Group
  4. Greentown China
  5. China Jinmao Holdings

and more…

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Dec 10
0

Daily Brief Thematic (Sector/Industry): Japan Weekly | Chinese Tourists Stay Close to Home and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Japan Weekly | Chinese Tourists Stay Close to Home

Japan Weekly | Chinese Tourists Stay Close to Home

By Mark Chadwick

  • Retail stocks perform well again as China relaxes restrictions on domestic travel
  • However, it could take a couple of years for international travel to return to previous levels
  • We believe that most of the catalysts for our bullish stance on this macro call have now played out

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Dec 10
0

Daily Brief ECM: VinFast IPO Preview – Too Big to Fail In Vietnam and more

By | Daily Briefs, ECM

In today’s briefing:

  • VinFast IPO Preview – Too Big to Fail In Vietnam
  • Seazen Group Placement – Won’t Do Much to Debt Profile, However Momentum Has Been Very Strong

VinFast IPO Preview – Too Big to Fail In Vietnam

By Douglas Kim

  • VinFast Auto (“VinFast”) is getting ready to complete its IPO on Nasdaq in January 2023.
  • We are cautious on the IPO of VinFast. Timing is awful and investors have slashed share prices of the company’s comps in the past year. 
  • The fact that the company is trying to hurry up to complete this IPO in early 2023 suggests that there could be some bigger concerns about long-term financing of VinFast.

Seazen Group Placement – Won’t Do Much to Debt Profile, However Momentum Has Been Very Strong

By Clarence Chu

  • Seazen (Formerly Future Land) (1030 HK) is looking to raise US$175m from its top-up placement.
  • The deal is a relatively small one at just 9.5 days of three month ADV and 4.9% of current mcap.
  • In this note, we will run the deal through our ECM framework and talk about the recent updates.

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Dec 10
0

Daily Brief Macro: CX Daily: Chinese Cities Continue Shift From ‘Zero-Covid’ and more

By | Daily Briefs, Macro

In today’s briefing:

  • CX Daily: Chinese Cities Continue Shift From ‘Zero-Covid’

CX Daily: Chinese Cities Continue Shift From ‘Zero-Covid’

By Caixin Global

  • Covid-19 / Chinese cities continue shift from ‘zero-Covid’.

  • Gold / China reports first rise in gold reserves since 2019.

  • Carbon / China’s local governments set out plans to meet 2030 peak carbon goal.

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Dec 10
0

Daily Brief Equity Bottom-Up: Yue Yuen (551 HK): Putting Their Best Feet Forward and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Yue Yuen (551 HK): Putting Their Best Feet Forward
  • Yue Yuen Industrial Holdings (551.HK) – Challenging Prospects Overshadow Undervaluation
  • 2023 High Conviction: NTT (Buy) – Surging DoCoMo Underappreciated as Markets Step Back from Value
  • Softbank Group – China Rebound Has Helped After End-Of-Buyback Hangover
  • Quick Idea’s
  • Malaysian Banks September 2022 Results Screener; RHB Stands Out, and Stick with CIMB

Yue Yuen (551 HK): Putting Their Best Feet Forward

By David Blennerhassett

  • Despite a softening global demand backdrop, Yue Yuen Industrial (551 HK), a global leader in the manufacture of athletic/outdoor and casual footwear, recently recorded its best 9M results since 2017.
  • Yue Yuen’s shares have only just recovered from a 20-year low.
  • From both a historical perspective and relative to peers, Yue Yuen is undemanding here. 

Yue Yuen Industrial Holdings (551.HK) – Challenging Prospects Overshadow Undervaluation

By Xinyao (Criss) Wang

  • Yue Yuen is essentially a large traditional manufacturing company, which once benefitted from China’s cheap labor and has brilliant history. But challenges seem inevitable as labor costs gradually increase.
  • Despite 22Q1-Q3 solid performance, in the environment of high inventory of brand customers and downward pressure on global economy, the order visibility of Yue Yuen in 22Q4/23Q1 could be low.
  • Either domestic demand or external demand, the overall situation may not be optimistic. Yue Yuen’s valuation is basically lower than its peers. However, we still recommend investors to remain vigilant.

2023 High Conviction: NTT (Buy) – Surging DoCoMo Underappreciated as Markets Step Back from Value

By Kirk Boodry

  • We have tweaked our numbers after Q2 results and catching up with the company.  In particular, we come away with more confidence in wireless / fintech growth
  • NTT looks cheap at 11x FY22e EPS v 12x for KDDI even as relative growth is expected to be better with ~9% EPS growth
  • Shares have outperformed TOPIX (+18% YTD v -3%) and this should continue in 2023 as solid financial performance and an attractive shareholder returns story provide support

Softbank Group – China Rebound Has Helped After End-Of-Buyback Hangover

By Kirk Boodry

  • Alibaba is up 20% QTD and the public Vision Fund portfolio is on track for its first positive quarter in almost two years thanks to China upside, mostly for Didi
  • That has kept the share price elevated even as the discount to fair value has expanded since buybacks ended at Q2 results
  • At 34% now, there is room for the discount to expand further as the range before the buyback surge was generally closer to 40%

Quick Idea’s

By Turtles all the way down

  • 111, inc (YI) has run up to $3.25. For a spread of only about 11%.
  • Which is not all that attractive since there is no definitive agreement signed. So I am closing it with a quick 13% gain here.
  • These Chinese merger situations sometimes randomly spike up, and I think it is wise to trade around them when upside isn’t as juicy anymore.

Malaysian Banks September 2022 Results Screener; RHB Stands Out, and Stick with CIMB

By Victor Galliano

  • Of the six Malaysian banks screened, we highlight RHB Bank and retain CIMB on the buy list; PB Bank and Maybank are quality but seem fairly valued
  • RHB Bank has, in the September quarter, meaningfully improved its pre-provision profitability versus its peers; RHB’s high CET1 ratio suppresses its ROE, and it is attractive on PE and PEG
  • CIMB once again improved its positive post-provision returns which is constructive for CIMB’s share price given its modest valuations versus its peers; its high NPL ratio is fully provisioned

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Dec 10
0

Daily Brief Event-Driven: Can Son-San Take Over Softbank Group Through Buybacks? and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Can Son-San Take Over Softbank Group Through Buybacks?
  • JCNC Is Still Overstretched Vs. Astra
  • MVIS Global Junior Gold Miners Index Rebalance: Two Adds, Four Deletes, Float Changes
  • MVIS Global Rare Earth/​​Strategic Metals Index Rebalance: Float & Capping Changes

Can Son-San Take Over Softbank Group Through Buybacks?

By Travis Lundy

  • On Thursday 8 December, an article showed up in Bloomberg suggesting Son-san had “increased his stake” as the company bought back shares, giving him more rights, “edging towards a buyout.”
  • That is a stretch. He went from below one-third to above one-third, giving him an explicit veto on shareholder super-majority resolutions, but it’s minor. He now has 34.2%.
  • The suggestion: if he got two-thirds, he could squeeze out minorities without a Tender Offer. Technically true, but not easy. I dig deeper and propose how it could be done.

JCNC Is Still Overstretched Vs. Astra

By David Blennerhassett

  • Jardine Cycle & Carriage (JCNC SP) is currently trading at a ~12% discount to NAV, just outside its narrowest post-Covid.
  • A key catalyst for the recent narrowing was JCNC’s inclusion in the SIMSCI Index at the end of last month.
  • JCNC is expensive here – relative to historical values –  and from an implied stub perspective.

MVIS Global Junior Gold Miners Index Rebalance: Two Adds, Four Deletes, Float Changes

By Brian Freitas

MVIS Global Rare Earth/​​Strategic Metals Index Rebalance: Float & Capping Changes

By Brian Freitas

  • As expected, there are no adds or deletes for the MVIS Global Rare Earth/Strategic Metals Index at the December rebalance.
  • There are free float and capping changes that will be implemented at the close on 16 December.
  • One way turnover is estimated at 4.26% and will result in a one-way trade of US$31.5m.

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