Smartkarma Daily Briefs

The December rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituents at 8%. This will lead to large flows.
The largest inflows will be on Alibaba Group, Haier Smart Home, Kuaishou Technology, Li Auto, PetroChina, Tencent, JD.com, China Resources Mixc Lifestyle Services and Tingyi Holding.
The largest outflows will be on SMIC, NetEase, AIA Group, HSBC Holdings, China Construction Bank, Alibaba Health Information Technology, Innovent Biologics, China Mobile, Ping An Insurance and ICBC.

FTSE China 50 Index Rebalance: JD Health, Yum China IN; Longfor, Xpeng OUT

JD Health (6618 HK) and Yum China Holdings Inc (9987 HK) will replace Longfor Properties (960 HK) and XPeng (9868 HK) in the FTSE China 50 Index on 16 December.
The largest flow and impact of passive trading will be on Yum China Holdings Inc (9987 HK). There could be buying on Yum China Holdings, Inc (YUMC US) overnight.
Short interest on the deletes is over 7% of float and there could be short covering against the passive selling at the close on 16 December.

CES China Semiconductor Chips Index Rebalance: Four Changes in December

There are 4 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 9 December.
Empyrean Technology, GalaxyCore, Shanghai Fudan Microelectronics and Shanghai Awinic Technology will replace Grinm Advanced Materials, Chengdu Corpro Technology, Shanghai Sinyang Smcndctr Mtls and Espressif Systems Shanghai in the index.
Shanghai Fudan Microelectronics Group (688385 CH) will be added to the MSCI China Index at the close today and will also be added to the CSI 500 Index in December.

FTSE EPRA Nareit Index Rebalance: One Deletion for Australia

There are no adds for the FTSE EPRA Nareit Developed Asia Index in December. The only deletion is Home Consortium Ltd (HMC AU).
Passive trackers are estimated to sell 12x ADV on Home Consortium Ltd at the close 16 December. Short interest is nearly the same and there could be some covering.
Home Consortium Ltd (HMC AU) has underperformed its peers over the last 12 months and still trades more expensive to its peer group.

Appier (4180) Nearing A TSE Prime (And TOPIX) Announcement?

By Travis Lundy

On 17 Feb 2022, Janaghan Jeyakumar, CFA wrote about Appier Group (4180 JP) suggesting it was a TOPIX inclusion candidate in the not-distant future.
In mid-August 2022, he reiterated his opinion. Three days later, the company said they had applied for TSE Prime membership. We are coming up on the timing for an announcement.
It would mean buying, but the shareholder structure is interesting, and intentions are not easy to read. But if they announce imminently, the calendar makes the event even more interesting.

KLCI Index Rebalance: Preliminary Changes Announced; Should Be Same as Final

Post market close yesterday, FTSE announced the preliminary changes to the Kuala Lumpur Composite Index (KLCI) (FBMKLCI INDEX) for the December rebalance. The final changes will be announced today.
As expected, AMMB Holdings (AMM MK) and Ql Resources (QLG MK) will replace Hartalega Holdings (HART MK) and Top Glove Corp (TOPG MK) in the index.
From a near 20% index weight in 2020, Malaysian glovemakers will have no representation in the index once these changes are implemented.

Itochu Keeps Buying Fuji Oil, Takeover Offer Could Be Possible With Shares Near The Cyclical Bottom

By Oshadhi Kumarasiri

Itochu Corp (8001 JP) has restarted accumulating Fuji Oil Holdings (2607 JP) shares, with an acquisition of 3.5m shares during the last-quarter to take its ownership percentage in Fuji-Oil to 44%.
With both earnings and valuations at a cyclical bottom, Itochu could be encouraged to accumulate more Fuji Oil shares in the short term, resulting in Fuji Oil outperforming its peers.
We think even a takeover offer could be possible while the share price is hovering near the cyclical bottom.

Hang Seng Indexes: Rebalances Today; Recent Trading Data

The December rebalance of the HSI INDEX, HSCEI INDEX and HSTECH INDEX takes place at the close today. One-way flow is estimated at HK$8.4bn.
There are 3 adds for the HSI INDEX and 4 adds/ 4 deletes for the HSCEI INDEX. There are float changes for a few stocks as well as capping changes.
There is excess volume on most adds/deletes post announcement and short interest has also picked up significantly.

Carbon Revolution: SPACed & Smacked

Following a one-month suspension, carbon-fibre wheel maker Carbon Revolution Ltd (CBR AU) announced it will merge (and delist from the ASX) with Twin Ridge Capital, a US-listed SPAC.
CBR said it also requires upward of A$30mn in bridging finance to fund near-term costs (through to June 2023). The share price promptly tanked 50% upon the resumption of trading.
It’s an intriguing situation with an implied notional share price of A$1.49/share under the merger, versus the current price of A$0.15. So I dig a little deeper.

Skymark IPO – Valuation

By Mio Kato

Skymark is a little difficult to value given wide dispersions in peer multiples and earnings recovery trajectories.
However, on balance we believe the issue looks to be on the cheap side.
In addition, there are several quirks to the balance sheet, not all of which are negative.

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Dec 02

Daily Brief Consumer: Fuji Oil Holdings, Li Auto, Carbon Revolution Ltd, Tokyo Stock Exchange Tokyo Price Index Topix, Gap Inc/The, Foot Locker Inc, Macy’s Inc, Ross Stores Inc and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Itochu Keeps Buying Fuji Oil, Takeover Offer Could Be Possible With Shares Near The Cyclical Bottom
Hang Seng Indexes: Rebalances Today; Recent Trading Data
Carbon Revolution: SPACed & Smacked
Again, It Is the BOJ’s ETF Issue that Makes Us Think
Gap Inc: Gap Store On Amazon & Other Developments
Foot Locker Inc: Extended Partnership With Puma & Other Drivers
Macy’s Inc: Digital Marketplace & Other Drivers
Ross Stores: Store Additions & Other Drivers

Itochu Keeps Buying Fuji Oil, Takeover Offer Could Be Possible With Shares Near The Cyclical Bottom

By Oshadhi Kumarasiri

Itochu Corp (8001 JP) has restarted accumulating Fuji Oil Holdings (2607 JP) shares, with an acquisition of 3.5m shares during the last-quarter to take its ownership percentage in Fuji-Oil to 44%.
With both earnings and valuations at a cyclical bottom, Itochu could be encouraged to accumulate more Fuji Oil shares in the short term, resulting in Fuji Oil outperforming its peers.
We think even a takeover offer could be possible while the share price is hovering near the cyclical bottom.

Hang Seng Indexes: Rebalances Today; Recent Trading Data

The December rebalance of the HSI INDEX, HSCEI INDEX and HSTECH INDEX takes place at the close today. One-way flow is estimated at HK$8.4bn.
There are 3 adds for the HSI INDEX and 4 adds/ 4 deletes for the HSCEI INDEX. There are float changes for a few stocks as well as capping changes.
There is excess volume on most adds/deletes post announcement and short interest has also picked up significantly.

Carbon Revolution: SPACed & Smacked

Following a one-month suspension, carbon-fibre wheel maker Carbon Revolution Ltd (CBR AU) announced it will merge (and delist from the ASX) with Twin Ridge Capital, a US-listed SPAC.
CBR said it also requires upward of A$30mn in bridging finance to fund near-term costs (through to June 2023). The share price promptly tanked 50% upon the resumption of trading.
It’s an intriguing situation with an implied notional share price of A$1.49/share under the merger, versus the current price of A$0.15. So I dig a little deeper.

Again, It Is the BOJ’s ETF Issue that Makes Us Think

By Aki Matsumoto

Although the stock split doesn’t raise the intrinsic value of the stock, the stock price is likely to rise on the speculation that future purchases into the NISA are expected.
As cross-shareholdings decline, the companies are actively engaging in IR activities with individual investors to secure shareholders who share the company’s position against foreign shareholders who are increasing their presence.
Some believe that NISA will be used as receptacle for the disposal of BOJ’s ETF holdings, but companies may hope that the silent shareholder hold ETFs as long as possible.

Gap Inc: Gap Store On Amazon & Other Developments

Gap delivered a strong set of results in the quarter surpassing Wall Street expectations in terms of revenues as well as earnings.
The company has taken steps to maximize profitability and cash flow while rebalancing and lowering inventory to drive short-term and long-term improvements across its entire business.
However, the company is proving strength in lifestyle segments, which are growing at an accelerated rate in the current market.

Foot Locker Inc: Extended Partnership With Puma & Other Drivers

Despite operating in a turbulent market, including inflationary pressure on the consumer around the world, Foot Locker generated better-than-expected results and managed to surpass Wall Street expectations on all fronts.
Due to strong brand consistency across the board and successful back-to-school marketing initiatives, Kids Foot Locker had mid-single-digit growth.
Additionally, Foot Locker extended its partnership with Puma to connect with next-generation consumers through exclusive basketball and other high-end partnerships.

Macy’s Inc: Digital Marketplace & Other Drivers

Macy’s delivered a strong set of results surpassing Wall Street expectations in terms of revenues as well as earnings.
Besides, they created permanent Toys “R” Us shop-in-shops within every Macy’s site, offering a unique experience not offered nationally anywhere else.
Macy’s also has a flexible pricing plan to change discounts and markdowns if demand materializes slowly.

Ross Stores: Store Additions & Other Drivers

Ross Stores’ results were well above market expectations in terms of revenues as well as earnings as it increased storewide values.
On the other hand, given their third-quarter sales growth and enhanced holiday assortments, they face their easiest sales and earnings comparisons in the fourth quarter.
We maintain our ‘Hold’ rating on Ross Stores with a revised target price.

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Dec 02

Daily Brief Health Care: 3SBio Inc, MedSci Healthcare Holdings, Agilent Technologies and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

3SBio Inc (1530 HK): Hair Product Acts as the Savior; Marginal Growth of Flagship Drug
Pre-IPO MedSci Healthcare Holdings – The Investment Logic, the Business Analysis and the Risks
Agilent Technologies: Key Drivers

3SBio Inc (1530 HK): Hair Product Acts as the Savior; Marginal Growth of Flagship Drug

By Tina Banerjee

Mandi, OTC alopecia drug of 3SBio Inc (1530 HK), reported revenue growth of 42% y/y in 1H22 and gained 70bps market share over the last six months.
With the resurgence of COVID-19 in China interrupting the regular operations of outpatient services at medical institutions, 3SBio’s performance is expected to be affected in near-term.
3SBio is preparing to launch its new drug nalfuraphine hydrochloride orally disintegrating tablets for liver and kidney disease pruritus in China.

Pre-IPO MedSci Healthcare Holdings – The Investment Logic, the Business Analysis and the Risks

By Xinyao (Criss) Wang

The large physician network is actually the cornerstone for MedSci Healthcare (MHH HK)’s precision omni-channel marketing solutions and RWS solutions, and also the key to support the overall investment logic.
In fierce competition, how to retain physician network for a long time, convert them into business value continuously and achieve the high growth trend expected by the market is challenging.
In terms of valuation, MedSci’s valuation could be higher than Medlive due to its stronger physician platform solutions business and medical professional network, but could be lower than HUAYIWANG.

Agilent Technologies: Key Drivers

Agilent performed well in the fourth quarter and its revenues as well as earnings were vastly exceeding its forecasts as well as market expectations.
Revenue for the Agilent CrossLab Group in the fourth quarter was $381 million.
With each of their three business areas expanding by double digits for the year, Agilent have shown a broad-based strength.

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Dec 02

Daily Brief Singapore: Igloo and more

By Smartkarma Daily Briefs | Daily Briefs, Singapore

In today’s briefing:

Igloo Scores US$27M More to Extend Series B Financing Round to US$46M

Igloo Scores US$27M More to Extend Series B Financing Round to US$46M

By e27

Igloo provides “competitively-priced” insurance for delivery riders in Thailand, Singapore, and the Philippines, and Vietnam
Singapore-headquartered insurtech startup Igloo announced an additional US$27 million to close its Series B round at US$46 million
The additional funds will provide Igloo with a comfortable multi-year runway

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Dec 02

Daily Brief Indonesia: Indika Energy and more

By Smartkarma Daily Briefs | Daily Briefs, Indonesia

In today’s briefing:

Morning Views Asia: Indika Energy, Medco Energi

Morning Views Asia: Indika Energy, Medco Energi

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.

Indika Energy
Medco Energi

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Dec 02

Daily Brief Australia: Carbon Revolution Ltd, FrankieOne, Bigtincan Holdings Ltd and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

Carbon Revolution: SPACed & Smacked
HuffPost Investor, Binance Join US$15.5M Series A+ Round of Fraud Detection Startup FrankieOne
Expect Bigtincan To Reject SQN’s Proposal

Carbon Revolution: SPACed & Smacked

Following a one-month suspension, carbon-fibre wheel maker Carbon Revolution Ltd (CBR AU) announced it will merge (and delist from the ASX) with Twin Ridge Capital, a US-listed SPAC.
CBR said it also requires upward of A$30mn in bridging finance to fund near-term costs (through to June 2023). The share price promptly tanked 50% upon the resumption of trading.
It’s an intriguing situation with an implied notional share price of A$1.49/share under the merger, versus the current price of A$0.15. So I dig a little deeper.

HuffPost Investor, Binance Join US$15.5M Series A+ Round of Fraud Detection Startup FrankieOne

By e27

FrankieOne, a global platform connecting customers to multiple identity verification and fraud detection vendors via one API, has added US$15.5 million to its Series A+ round.
The new tranche will allow FrankieOne to expand its business across Asia Pacific and North America.
Founded in 2019 by Simon Costello and Aaron Chipper, FrankieOne is an identity and fraud detection engine helping companies onboard and protect their customers.

Expect Bigtincan To Reject SQN’s Proposal

Software provider Bigtincan Holdings Ltd (BTH AU) has announced an indicative proposal, by way of Scheme, from PE outfit SQN Investors at A$0.80/share, a 17.6% premium to last close.
Due diligence has not yet been afforded. SQN currently holds a 13.6% stake.
BTH also highlighted it has had preliminary discussions with other interested parties. Expect BTH’s board not to engage with SQN at this price.

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Dec 02

Daily Brief United States: Asana, Snowflake Inc, Binance Coin, Zoom Video Communications Inc, Dell Technologies Inc, Gap Inc/The, Macy’s Inc, Ross Stores Inc, Ethereum, Analog Devices and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

Liquidity Risk Short Candidates: Luminar Tech, Asana, Appian, Oak Street Health
Snowflake FY3Q23 Earnings: Stabilizing Growth in FY2024
Crypto.com, Independent Reserve in Top 5 for Strong AML; Binance Places 42nd
Zoom Video Communications: Product Updates & Other Developments
Dell Technologies: Major Drivers
Gap Inc: Gap Store On Amazon & Other Developments
Macy’s Inc: Digital Marketplace & Other Drivers
Ross Stores: Store Additions & Other Drivers
The Long and Short of Aave
Analog Devices Inc: New SPoE PESE & PD Solutions & Other Drivers

Liquidity Risk Short Candidates: Luminar Tech, Asana, Appian, Oak Street Health

By Eric Fernandez, CFA

Liquidity shorts can be great short candidates. The key characteristic is that the company may not be viable, economically, given their cash flows and cash requirements.
Liquidity shorts have built-in catalysts, have moderate to higher betas, and can have strong down moves if a crisis develops. They can go bankrupt, pushing the stock price near zero.
Today we are flagging Luminar Tech, Asana, Appian, Oak Street Health

Snowflake FY3Q23 Earnings: Stabilizing Growth in FY2024

By Aaron Gabin

Snowflake guided below consensus for 4Q2023 revenue growth on a mix of macro conservatism and a quirky point that more vacation travel will reduce the amount of workloads run.
Margins continue to beat to the upside and management is guiding FY2024 FCF marginst to 23%, just 2pts below the LT guidance.
Very conservative management team also guided for a stabilization in revenue growth for FY2024 at 47%, a bit below consensus, but better than feared given the earnings reports recently.

Crypto.com, Independent Reserve in Top 5 for Strong AML; Binance Places 42nd

By Tech in Asia

Familiar names in Singapore landed in the top five of a list featuring crypto exchanges with strong anti-money laundering (AML) systems.
Blockchain.com and Independent Reserve, which are both licensed to operate in Singapore, ranked first and third place respectively. Crypto.com, which has in-principle approval, placed fifth.
Binance, the largest crypto exchange in the world, in the 42nd spot.

Zoom Video Communications: Product Updates & Other Developments

Zoom Video Communications delivered a decent quarter and managed an all-around beat.
From a product perspective, the company had robust growth in Zoom Phone, along with contributions from Zoom Rooms and other products.
Zoom Video Communications has recently announced a wide range of updates in different business units like Zoom IQ for sales, Zoom Events, Zoom Spaces, Zoom Contact Centre, and Zoom One.

Dell Technologies: Major Drivers

After announcing a weak outlook in the last quarter and causing its stock price to plummet, Dell has shown a decent recovery.
Its stock price has continued to recover after the company delivered an all-around beat in a challenging demand environment.
Overall, we remain neutral on Dell and give it a ‘Hold’ rating with a revised target price.

Gap Inc: Gap Store On Amazon & Other Developments

Gap delivered a strong set of results in the quarter surpassing Wall Street expectations in terms of revenues as well as earnings.
The company has taken steps to maximize profitability and cash flow while rebalancing and lowering inventory to drive short-term and long-term improvements across its entire business.
However, the company is proving strength in lifestyle segments, which are growing at an accelerated rate in the current market.

Macy’s Inc: Digital Marketplace & Other Drivers

Macy’s delivered a strong set of results surpassing Wall Street expectations in terms of revenues as well as earnings.
Besides, they created permanent Toys “R” Us shop-in-shops within every Macy’s site, offering a unique experience not offered nationally anywhere else.
Macy’s also has a flexible pricing plan to change discounts and markdowns if demand materializes slowly.

Ross Stores: Store Additions & Other Drivers

Ross Stores’ results were well above market expectations in terms of revenues as well as earnings as it increased storewide values.
On the other hand, given their third-quarter sales growth and enhanced holiday assortments, they face their easiest sales and earnings comparisons in the fourth quarter.
We maintain our ‘Hold’ rating on Ross Stores with a revised target price.

The Long and Short of Aave

By Kaiko

Lending and borrowing in DeFi follows the same basic principles as it does in traditional finance: I supply some asset as collateral and I am able to borrow a certain amount of some other asset.
However, this being DeFi, there are some important differences from TradFi.
The most important is that the protocol has no way of knowing how trustworthy I am, and thus will require any loan to be overcollateralized.

Analog Devices Inc: New SPoE PESE & PD Solutions & Other Drivers