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Smartkarma Daily Briefs

Dec 06
0

Daily Brief Health Care: Sichuan Kelun Pharmaceutical, Baxter International and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Sichuan Kelun Pharmaceutical (002422.CH) – The Deal with Merck Brightens the Outlook; A Dark Horse?
  • Baxter International Inc.: Initiation of Coverage – Recent FDA Approvals & Other Drivers
  • Baxter International Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report

Sichuan Kelun Pharmaceutical (002422.CH) – The Deal with Merck Brightens the Outlook; A Dark Horse?

By Xinyao (Criss) Wang

  • Due to huge negative policy impact, the prospects of Kelun’s traditional businesses would be lackluster. However, the deal with MSD has completely changed Kelun’s investment logic. 
  • For the two ADC drugs in the deal, there is a great chance for SKB264 to be eventually druggable. Kelun’s ADC technology is also keeping up with the times. 
  • We deep dive the valuation of Kelun. The market’s perception of Kelun is still at the level of traditional businesses. The potential of its ADC pipeline hasn’t been priced in.

Baxter International Inc.: Initiation of Coverage – Recent FDA Approvals & Other Drivers

By Baptista Research

  • This is our first report on Baxter International, one of the largest players in the domain of dialysis therapies and other healthcare products.
  • The overall demand for products across the Baxter and traditional Hillrom portfolios continues to be strong.
  • We initiate coverage on the stock of Baxter International with a ‘Buy’ rating.

Baxter International Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report

By Baptista Research

  • Baxter International is a giant within the space of dialysis therapies and other healthcare products.
  • The company’s recent financial results have been decent despite the fact that sales were impacted by specific supply chain-related issues.
  • The overall demand for products across the Baxter and traditional Hillrom portfolios continues to be strong.

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Dec 06
0

Daily Brief Financials: Nikkei 225, Nippon Prologis Reit, Logan Property Holdings, Perella Weinberg Partners, Star Health, NFT, Binance Coin and more

By | Daily Briefs, Financials

In today’s briefing:

  • Nikkei the First to Crack
  • Nippon Prologis REIT (3283 JP): Offering Could Be a Catalyst for Outperformance Vs Peers
  • Morning Views Asia: Central China Securities, Jingrui Holdings
  • Too Big to Fail?
  • Star Health IPO Lockup – Owned by Financial Investors, US$3.0bn Worth Shares Are Well in the Money
  • Sporting Crypto – Dec 5th: The Casino and The Factory
  • Bearish Sentiment Hits Binance’s BNB Token

Nikkei the First to Crack

By Thomas Schroeder

  • Japan has been a top long in Asia, the rising wedge had us reducing our long. Friday saw a pronounced RSI bear wedge break and price crack.
  • Japan faces rotation pressure into core Asia and will shift Japan into the bear camp on a muted recovery attempt.
  • Japan’s macro cycle remains trapped in a sideways range. Buy support near 26,000 and sell resistance near 29,000.

Nippon Prologis REIT (3283 JP): Offering Could Be a Catalyst for Outperformance Vs Peers

By Janaghan Jeyakumar, CFA

  • Japan’s largest logistics REIT Nippon Prologis Reit (3283 JP) (“NPR”) announced a US$170mn follow-on equity offering to fund their recent acquisition of three logistics facilities.
  • The primary offer quantity will be 76,570 units out of which 44,410 units and 32,160 units are expected to be allocated for domestic and international investors, respectively. 
  • Below is a closer look at the details of this offering and the potential of this offering to trigger strong secondary market performance in the following weeks.

Morning Views Asia: Central China Securities, Jingrui Holdings

By Charles Macgregor

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

Too Big to Fail?

By subSPAC

  • Investment Banks and Advisory firms have thrived over the past two years as the rapid pace of dealmaking induced by the post-pandemic era led to significant profits.
  • New York City-based Perella Weinberg Partners took advantage of the free-flowing capital market conditions by closing some of the biggest M&A deals over the last decade and choosing to list on public markets through a SPAC.
  • With all the talk of an economic slowdown going into 2023, Investment Banks are cautious heading into next year, focusing on preserving cash and switching to ancillary advisory services rather than staying on the hunt for big deals.

Star Health IPO Lockup – Owned by Financial Investors, US$3.0bn Worth Shares Are Well in the Money

By Sumeet Singh

  • In Dec 2021, Star Health (STARHEAL IN) (SHAI), the largest private health and retail health insurance company in India, raised around US$851m in its India IPO.
  • SHAI insured 20.5m people in FY21. SHAI primarily offers retail health insurance which accounted for 87.9% of its FY21 GWP. Individual agents accounted for 97% of its FY21 GWP.
  • In this note, we will talk about the upcoming lockup expiry.

Sporting Crypto – Dec 5th: The Casino and The Factory

By Sporting Crypto

  • Instead of going on a long rant about why this next iteration of NFTs is important more broadly – let’s contextualise this for the sports industry.
  • After all, this is a newsletter called Sporting Crypto.
  • The sports industry has seen some pretty amazing things when it comes to Web3.

Bearish Sentiment Hits Binance’s BNB Token

By Kaiko

  • Price Movements: The tokens for the decentralized derivatives exchanges dYdX and GMX have surged since the collapse of FTX.
  • Market Liquidity: Dollar trading volumes for BTC markets dropped to two year lows relative to Tether. 
  • Derivatives: BNB funding rates dip to their most negative this year.

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Dec 06
0

Daily Brief Consumer: Melco International Development, ATRenew, JD.com Inc., LG Energy Solution, DPC Dash, Weilong Delicious Global and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Where Does Melco’s Discount To NAV Go From Here?
  • ATRenew (RERE US): Pre-Owned Satisfaction
  • China Internet Weekly (5Dec2022): JD.com, Baidu, IQiyi, Alibaba Health, ZTO, Pinduoduo, KE
  • KOSPI 200 Passive Flow Breakdown, Feat. NPS Size & Trade Window Pattern
  • DPC Dash IPO: Dominos Getting Dominated
  • Weilong Delicious Global IPO – Tepid Recent Performance Still Makes It Look Expensive
  • Weilong Delicious IPO: Valuation Insights
  • ATRenew: Round & Round It Goes

Where Does Melco’s Discount To NAV Go From Here?

By David Blennerhassett

ATRenew (RERE US): Pre-Owned Satisfaction

By Arun George

  • ATRenew (RERE US) operates the largest pre-owned consumer electronics transactions and services platform in China. It is listed in June 2021 at US$14 per ADS. 
  • The shares are down 63% YTD largely due to the tech market sell-off. Unlike most tech companies, ATRenew is starting to deliver growth with profits, cash generation and share buybacks.
  • The valuation is undemanding compared to a peer group of pre-owned marketplaces and global online retail marketplaces. It will also appeal to investors with an ESG mandate.

China Internet Weekly (5Dec2022): JD.com, Baidu, IQiyi, Alibaba Health, ZTO, Pinduoduo, KE

By Ming Lu

  • Richard Liu came back to manage JD.com after he resigned half a year ago.
  • Alibaba Health revenue increased 23% YoY in 1H23, which benefited from hospitals being closed.
  • Pinduoduo revenue increased by 65% YoY and operating profit increased 388% YoY in 3Q22.

KOSPI 200 Passive Flow Breakdown, Feat. NPS Size & Trade Window Pattern

By Sanghyun Park

  • We should set the minimum level of the target size to estimate the flow impact on T-1 Effective at ₩15T from ETFs.
  • We then need to pay attention to the recent trend that an additional flow from NPS appears post-Effective, with a significant portion on T+1~3.
  • We should revise down our expected rate of return on our early-phase setup aiming at the preemptive trading (T-6W Effective) by NPS.

DPC Dash IPO: Dominos Getting Dominated

By Oshadhi Kumarasiri

  • DPC Dash (DPC HK) is the exclusive master franchisee of Domino’s Pizza (DPZ US) in mainland China, Hong Kong and Macau with around 546 stores as of 9M2022.
  • The company has refiled for an IPO on the Hong Kong Stock Exchange after failing the first time to raise around US $100m in March 2022.
  • Discounted pricing has failed to propel the Dominos brand to the top in many Asian markets where pizza is considered a luxury meal. DPC-Dash is experiencing the same in China.

Weilong Delicious Global IPO – Tepid Recent Performance Still Makes It Look Expensive

By Sumeet Singh

  • Weilong Delicious Global (WDG HK)  a spicy snack food company in China, aims to raise around US$140m in its Hong Kong IPO.
  • According to F&S, WDG ranked first among spicy snack food enterprises in China, with a market share of 6.2%, and in the seasoned flour product and spicy vegetable snacks categories.
  • We have covered various aspects of the deal in our previous notes, in this note, we will talk about  the final valuations.

Weilong Delicious IPO: Valuation Insights

By Arun George

ATRenew: Round & Round It Goes

By David Blennerhassett

  • JD.com Inc. (9618 HK)-backed ATRenew (RERE US), one of the pioneers of China’s circular economy, registered its first non-GAAP net profit in the 3Q22.
  • The improvement pivoted off core business stability (consumer electronic devices recycling and sales) and an increasing revenue stream from its multi-category recycling business, including luxury goods.
  • This is all positive. However ATR, like all US-listed China plays, faces the prospect of a potential delisting under the HFCAA just 16 months away.

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Dec 06
0

Most Read: TA Chen Stainless Pipe, SK REITs, Monadelphous, Nomura Research Institute, King’s Town Bank, Daiei Kankyo, Nikkei 225, Melco International Development, China Shenhua Energy Co H and more

By | Daily Briefs, Most Read

In today’s briefing:

  • FTSE TWSE Taiwan Dividend+ Index Rebalance: On Expected Lines; But the Flow Is Massive
  • FTSE EPRA Nareit Index Rebalance: Now One Add for Korea
  • S&P/​​​ASX Index Rebalance (Dec 2022): Couple of Changes to Close Out the Year
  • NRI (4307) Likely Prices Today – Expect Weakness Then Strength
  • Monadelphous (MND AU) Is The S&P ASX 200 ADD – There’s a Trade Here
  • Taiwan Div+ Index Dec22 Rebal Trade – +7.1% Now; Amend and HODL
  • Daiei Kankyo (9336): TSE Prime IPO and Index Demand
  • Nikkei the First to Crack
  • Where Does Melco’s Discount To NAV Go From Here?
  • HSCEI Index Rebalance Preview: Shenhua Energy (1088) Could Replace China Feihe (6186)

FTSE TWSE Taiwan Dividend+ Index Rebalance: On Expected Lines; But the Flow Is Massive

By Brian Freitas

  • There are 26 inclusions and 5 deletions for the index resulting in a one-way turnover of 46.3% and a one-way trade of TWD 79.52bn (US$2.6bn). That is HUGE!
  • There at 14 stocks that have over 5 days of ADV to buy from passive funds while there are 20 stocks with more that 5 days of ADV to sell.
  • Over the last 2 weeks and 4 weeks, short interest has decreased on most of the adds while increasing on all the deletes and most of the stocks with outflows.

FTSE EPRA Nareit Index Rebalance: Now One Add for Korea

By Brian Freitas

S&P/​​​ASX Index Rebalance (Dec 2022): Couple of Changes to Close Out the Year

By Brian Freitas

NRI (4307) Likely Prices Today – Expect Weakness Then Strength

By Travis Lundy

  • On 25 November Nomura Research Institute Ltd (4307 JP) announced that Jafco Co Ltd (8595 JP) and Nomura Holdings (8604 JP) would conduct a Secondary Offering of NRI Shares. 
  • The sale is 36.97mm shares plus a greenshoe. It’s a big deal ($1bn) including greenshoe after JPY has just strengthened, but underperformance both before and after announcement sets up well. 
  • Expect weakness today, but the stock is now at a two-year low, and the PER multiple premium is now at the lowest 3mo average premium in 5yrs. Expect retail buying.

Monadelphous (MND AU) Is The S&P ASX 200 ADD – There’s a Trade Here

By Travis Lundy

  • Monadelphous (MND AU) will be added to the S&P ASX 200 Index on 16 December 2022.
  • This is not a surprise. It has been the lead contender for a December ADD slot since the day after the September rebalance was completed (see here).
  • There is a fair bit of volume to buy, and there are pair trades to do.

Taiwan Div+ Index Dec22 Rebal Trade – +7.1% Now; Amend and HODL

By Travis Lundy

Daiei Kankyo (9336): TSE Prime IPO and Index Demand

By Travis Lundy

  • Daiei Kankyo (9336 JP) – designer, builder, operator/maintainer of waste management/recycling, soil purification, waste-to-energy, and similar infrastructure – will IPO on the TSE Prime market on 14 December.  
  • The business is somewhat unexciting, but likely a non-growing, non-shrinking business which could roll up others. 
  • The TSE Prime listing will mean it will have a TOPIX Inclusion at the end of January.

Nikkei the First to Crack

By Thomas Schroeder

  • Japan has been a top long in Asia, the rising wedge had us reducing our long. Friday saw a pronounced RSI bear wedge break and price crack.
  • Japan faces rotation pressure into core Asia and will shift Japan into the bear camp on a muted recovery attempt.
  • Japan’s macro cycle remains trapped in a sideways range. Buy support near 26,000 and sell resistance near 29,000.

Where Does Melco’s Discount To NAV Go From Here?

By David Blennerhassett

HSCEI Index Rebalance Preview: Shenhua Energy (1088) Could Replace China Feihe (6186)

By Brian Freitas

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Dec 06
0

Daily Brief South Korea: LG Energy Solution and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KOSPI 200 Passive Flow Breakdown, Feat. NPS Size & Trade Window Pattern

KOSPI 200 Passive Flow Breakdown, Feat. NPS Size & Trade Window Pattern

By Sanghyun Park

  • We should set the minimum level of the target size to estimate the flow impact on T-1 Effective at ₩15T from ETFs.
  • We then need to pay attention to the recent trend that an additional flow from NPS appears post-Effective, with a significant portion on T+1~3.
  • We should revise down our expected rate of return on our early-phase setup aiming at the preemptive trading (T-6W Effective) by NPS.

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Dec 06
0

Daily Brief Indonesia: Aneka Gas, ABM Investama and more

By | Daily Briefs, Indonesia

In today’s briefing:

  • Aneka Gas (AGII IJ) – Out of Thin Air
  • Asia HY Monthly – November 2022 – Lucror Analytics

Aneka Gas (AGII IJ) – Out of Thin Air

By Angus Mackintosh

  • Aneka Gas is an interesting concept in that its product literally comes out of thin air given its position as Indonesia’s leading Industrial gas player with a 45% market share.
  • The company provides investors with wide-ranging exposure to the Indonesian economy from industry to infrastructure, consumer goods, healthcare, and SME amongst others, which also reduces risk through diversity.
  • Aneka Gas 9M2022 numbers reflected a change in revenue mix and demand for medical gas reduces post-COVID and other areas such as industry, retail, and infrastructure started to recover.

Asia HY Monthly – November 2022 – Lucror Analytics

By Charles Macgregor

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

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Dec 06
0

Daily Brief Japan: Nikkei 225, Nippon Prologis Reit, Daifuku Co Ltd, CEL Corp and more

By | Daily Briefs, Japan

In today’s briefing:

  • Nikkei the First to Crack
  • Nippon Prologis REIT (3283 JP): Offering Could Be a Catalyst for Outperformance Vs Peers
  • Daifuku (6383) | Attractive Valuation Drivers Despite near Term Risks
  • A Profitable Japanese Microcap Trading at a 53% Discount to NCAV.

Nikkei the First to Crack

By Thomas Schroeder

  • Japan has been a top long in Asia, the rising wedge had us reducing our long. Friday saw a pronounced RSI bear wedge break and price crack.
  • Japan faces rotation pressure into core Asia and will shift Japan into the bear camp on a muted recovery attempt.
  • Japan’s macro cycle remains trapped in a sideways range. Buy support near 26,000 and sell resistance near 29,000.

Nippon Prologis REIT (3283 JP): Offering Could Be a Catalyst for Outperformance Vs Peers

By Janaghan Jeyakumar, CFA

  • Japan’s largest logistics REIT Nippon Prologis Reit (3283 JP) (“NPR”) announced a US$170mn follow-on equity offering to fund their recent acquisition of three logistics facilities.
  • The primary offer quantity will be 76,570 units out of which 44,410 units and 32,160 units are expected to be allocated for domestic and international investors, respectively. 
  • Below is a closer look at the details of this offering and the potential of this offering to trigger strong secondary market performance in the following weeks.

Daifuku (6383) | Attractive Valuation Drivers Despite near Term Risks

By Mark Chadwick

  • Daifuku is a growth stock that has fallen by 26% YTD reflecting near term risks to growth and margins
  • We believe that Daifuku is a major beneficiary of continued investment in automation, especially in e-commerce and logistics
  • We analyse Daifuku’s core valuation drivers and see around 16% upside for the stock

A Profitable Japanese Microcap Trading at a 53% Discount to NCAV.

By Generals and Workouts

  • The cash comes from a one-off asset sale. CEL hasn’t been building cash on the balance sheet for years. While management has no intention of paying out the cash at present, they plan to use it for acquisitions. It won’t stay on the balance sheet for ever.

  • CEL’s operating business is not a great business, but it’s not terrible either. CEL earned an average of 15% pretax on capital employed over the last three years (FY20-FY22). The operating business earns above its cost of capital, is consistently profitable and ~40% of earnings are paid out as dividends.

  • Management has a lot of skin in the game. CEL’s founder and president, Masatsugu Shinno, owns 60% of the company, which aligns his interests with shareholders.

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Dec 06
0

Daily Brief India: Indian Energy Exchange Ltd, ABM Investama, Star Health and more

By | Daily Briefs, India

In today’s briefing:

  • Smartkarma Webinar | Top Indian Equity Picks
  • Asia HY Monthly – November 2022 – Lucror Analytics
  • Star Health IPO Lockup – Owned by Financial Investors, US$3.0bn Worth Shares Are Well in the Money

Smartkarma Webinar | Top Indian Equity Picks

By Smartkarma Research

In the next webinar, we welcome Smartkarma Insight Provider Gauri Anand , who will be sharing with us her Top indian Equity Picks and the investment philosophy behind each of her picks. Have any burning questions about companies like Indian Energy Exchange (IEX IN), VA Tech Wabag (VATW IN), or UPL Ltd (UPLL IN)? Get them answered in the live Q&A that will conclude the session.

The webinar will be hosted on Wednesday, 21 December 2022, 17:00 SGT/HKT.

Gauri Anand is a mid-small cap specialist based in India. With a focus on equities, Gauri combs top down and bottom up approaches to identify themes and value stocks at its inflexion point. Sector agnostic with a value oriented – Inflexion approach, Gauri dives into bottom Up ideas with a biased towards Sustainability and ESG. 

Asia HY Monthly – November 2022 – Lucror Analytics

By Charles Macgregor

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

Star Health IPO Lockup – Owned by Financial Investors, US$3.0bn Worth Shares Are Well in the Money

By Sumeet Singh

  • In Dec 2021, Star Health (STARHEAL IN) (SHAI), the largest private health and retail health insurance company in India, raised around US$851m in its India IPO.
  • SHAI insured 20.5m people in FY21. SHAI primarily offers retail health insurance which accounted for 87.9% of its FY21 GWP. Individual agents accounted for 97% of its FY21 GWP.
  • In this note, we will talk about the upcoming lockup expiry.

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Dec 06
0

Daily Brief United States: Netgear Inc, Crude Oil, Perella Weinberg Partners, NFT, Baxter International, Binance Coin and more

By | Daily Briefs, United States

In today’s briefing:

  • NTGR: Routing Thru Investor Day
  • The Commodity Report #80
  • Too Big to Fail?
  • Sporting Crypto – Dec 5th: The Casino and The Factory
  • Baxter International Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report
  • Baxter International Inc.: Initiation of Coverage – Recent FDA Approvals & Other Drivers
  • Bearish Sentiment Hits Binance’s BNB Token

NTGR: Routing Thru Investor Day

By Hamed Khorsand

  • NTGR held its annual investor day reflecting on the challenges it has incurred within retail and highlighting how consumer demand has remained strong for high-end devices and its 5G hotspot
  • NTGR’s stock has been trading at levels valuing the Company near its working capital on fears the business would continue to generate losses
  • NTGR’s transition in becoming a super-premium brand started over a year ago, but only in recent quarters has it began to take a bigger role on the consumer 

The Commodity Report #80

By The Commodity Report

  • US manufacturing contracted in November for the first time since May 2020 as output weakened in the face of a third-straight month of shrinking orders.
  • According to data released Thursday, the ISM’s gauge of factory activity slid to 49 from 50.2 in the prior month.
  • The measure has fallen in five of the last six months and stands below 50, the threshold separating expansion and contraction, for the first time since the pandemic lockdowns.

Too Big to Fail?

By subSPAC

  • Investment Banks and Advisory firms have thrived over the past two years as the rapid pace of dealmaking induced by the post-pandemic era led to significant profits.
  • New York City-based Perella Weinberg Partners took advantage of the free-flowing capital market conditions by closing some of the biggest M&A deals over the last decade and choosing to list on public markets through a SPAC.
  • With all the talk of an economic slowdown going into 2023, Investment Banks are cautious heading into next year, focusing on preserving cash and switching to ancillary advisory services rather than staying on the hunt for big deals.

Sporting Crypto – Dec 5th: The Casino and The Factory

By Sporting Crypto

  • Instead of going on a long rant about why this next iteration of NFTs is important more broadly – let’s contextualise this for the sports industry.
  • After all, this is a newsletter called Sporting Crypto.
  • The sports industry has seen some pretty amazing things when it comes to Web3.

Baxter International Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report

By Baptista Research

  • Baxter International is a giant within the space of dialysis therapies and other healthcare products.
  • The company’s recent financial results have been decent despite the fact that sales were impacted by specific supply chain-related issues.
  • The overall demand for products across the Baxter and traditional Hillrom portfolios continues to be strong.

Baxter International Inc.: Initiation of Coverage – Recent FDA Approvals & Other Drivers

By Baptista Research

  • This is our first report on Baxter International, one of the largest players in the domain of dialysis therapies and other healthcare products.
  • The overall demand for products across the Baxter and traditional Hillrom portfolios continues to be strong.
  • We initiate coverage on the stock of Baxter International with a ‘Buy’ rating.

Bearish Sentiment Hits Binance’s BNB Token

By Kaiko

  • Price Movements: The tokens for the decentralized derivatives exchanges dYdX and GMX have surged since the collapse of FTX.
  • Market Liquidity: Dollar trading volumes for BTC markets dropped to two year lows relative to Tether. 
  • Derivatives: BNB funding rates dip to their most negative this year.

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Dec 06
0

Daily Brief China: Melco International Development, China Shenhua Energy Co H, ATRenew, JD.com Inc., Meituan, Bilibili Inc, DPC Dash, Weilong Delicious Global and more

By | China, Daily Briefs

In today’s briefing:

  • Where Does Melco’s Discount To NAV Go From Here?
  • HSCEI Index Rebalance Preview: Shenhua Energy (1088) Could Replace China Feihe (6186)
  • ATRenew (RERE US): Pre-Owned Satisfaction
  • China Internet Weekly (5Dec2022): JD.com, Baidu, IQiyi, Alibaba Health, ZTO, Pinduoduo, KE
  • Meituan (3690 HK): 3Q22, Growth Higher, Loss Close to Zero, 90% Upside
  • Bilibili: Earnings Recovery to Continue with Improvement in Mobile Games and Cost Controls
  • DPC Dash IPO: Dominos Getting Dominated
  • ATRenew: A Turnaround Story With Material Increase in Profit Margins + Remaining Share Buyback
  • Weilong Delicious Global IPO – Tepid Recent Performance Still Makes It Look Expensive
  • Weilong Delicious IPO: Valuation Insights

Where Does Melco’s Discount To NAV Go From Here?

By David Blennerhassett

HSCEI Index Rebalance Preview: Shenhua Energy (1088) Could Replace China Feihe (6186)

By Brian Freitas

ATRenew (RERE US): Pre-Owned Satisfaction

By Arun George

  • ATRenew (RERE US) operates the largest pre-owned consumer electronics transactions and services platform in China. It is listed in June 2021 at US$14 per ADS. 
  • The shares are down 63% YTD largely due to the tech market sell-off. Unlike most tech companies, ATRenew is starting to deliver growth with profits, cash generation and share buybacks.
  • The valuation is undemanding compared to a peer group of pre-owned marketplaces and global online retail marketplaces. It will also appeal to investors with an ESG mandate.

China Internet Weekly (5Dec2022): JD.com, Baidu, IQiyi, Alibaba Health, ZTO, Pinduoduo, KE

By Ming Lu

  • Richard Liu came back to manage JD.com after he resigned half a year ago.
  • Alibaba Health revenue increased 23% YoY in 1H23, which benefited from hospitals being closed.
  • Pinduoduo revenue increased by 65% YoY and operating profit increased 388% YoY in 3Q22.

Meituan (3690 HK): 3Q22, Growth Higher, Loss Close to Zero, 90% Upside

By Ming Lu

  • The revenue growth rate accelerated to 28% YoY in 3Q22 versus 16% YoY in 2Q22.
  • Operating Loss was close to zero in 3Q22 and we believe it will turn positive in 2023.
  • According to price / sales history, we believe the company has an upside of 89% for year end 2023.

Bilibili: Earnings Recovery to Continue with Improvement in Mobile Games and Cost Controls

By Shifara Samsudeen, ACMA, CGMA

  • Bilibili Inc (BILI US) reported 3Q2022 results Tuesday. 3Q revenue increased 11.3% YoY to RMB5.8bn (vs consensus RMB5.7bn) while operating losses for the quarter dropped to RMB1.8bn vs consensus RMB2.1bn.
  • Recovery in mobile games biz alongside aggressive cost cutting measures supported improvement in Bilibili’s profitability during the quarter.
  • Pandaily reported that Bilibili is exploring expanding into the SEA region and increased R&D spending could be an indication that plans are underway.  

DPC Dash IPO: Dominos Getting Dominated

By Oshadhi Kumarasiri

  • DPC Dash (DPC HK) is the exclusive master franchisee of Domino’s Pizza (DPZ US) in mainland China, Hong Kong and Macau with around 546 stores as of 9M2022.
  • The company has refiled for an IPO on the Hong Kong Stock Exchange after failing the first time to raise around US $100m in March 2022.
  • Discounted pricing has failed to propel the Dominos brand to the top in many Asian markets where pizza is considered a luxury meal. DPC-Dash is experiencing the same in China.

ATRenew: A Turnaround Story With Material Increase in Profit Margins + Remaining Share Buyback

By Douglas Kim

  • ATRenew (RERE US) is one of the stocks in China that is starting to look very attractive after a sharp decline in its share price since its IPO.
  • ATRenew has achieved noticeable improvements in operations and profitability in the recent quarter.
  • Our base case valuation analysis suggests an implied market cap of US$720 million, representing an implied price of US$3.15 per share, representing an upside of 43% from current price.

Weilong Delicious Global IPO – Tepid Recent Performance Still Makes It Look Expensive

By Sumeet Singh

  • Weilong Delicious Global (WDG HK)  a spicy snack food company in China, aims to raise around US$140m in its Hong Kong IPO.
  • According to F&S, WDG ranked first among spicy snack food enterprises in China, with a market share of 6.2%, and in the seasoned flour product and spicy vegetable snacks categories.
  • We have covered various aspects of the deal in our previous notes, in this note, we will talk about  the final valuations.

Weilong Delicious IPO: Valuation Insights

By Arun George

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