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Smartkarma Daily Briefs

Nov 28
0

Daily Brief Macro: The End of Cheap Money: Banking Systems Face Varying Challenges and more

By | Daily Briefs, Macro

In today’s briefing:

  • The End of Cheap Money: Banking Systems Face Varying Challenges
  • A Cyclical Rebound Mirage?
  • Waiting For Clarity From the Nov. 30 Powell Speech
  • All They Told You About Money Printing Is Really, Really Wrong
  • Malaysia: PM Anwar Ibrahim Has a Lifetime of Experience to Deliver Unity & Progress

The End of Cheap Money: Banking Systems Face Varying Challenges

By Said Desaque

  • The inexperience of the current generation of central bankers towards fighting inflation was brutally exposed in 2022, but financial markets have been reluctant to punish them in an overly-harsh manner. 
  • The extended period of global monetary accommodation had negative consequences for banking profitability, particularly in the Eurozone and Japan, but ending cheap money will have different outcomes across regions.
  • Tighter monetary policies in the Asia Pacific region and softening external demand mean that banking systems could face asset quality concerns when profitability has not fully recovered to pre-pandemic levels. 

A Cyclical Rebound Mirage?

By Cam Hui

  • Technical internals have been pointing to a shift in leadership to value and cyclical sectors, indicating the emergence of cyclical green shoots.
  • Further analysis of technical internals, as well as the macro picture, indicate that hope of a cyclical rebound may be an illusion.
  • Macro and valuation risk are weighing on equity prices and downside risk remains.

Waiting For Clarity From the Nov. 30 Powell Speech

By Cam Hui

  • The markets reacted with a minor risk-on tone after the release of the November FOMC minutes, but it could be an over-reaction.
  • Fed Chair Jerome Powell is scheduled to speak on the economy and labour markets on November 30.
  • That speech is likely to set the tone for the markets for the coming weeks.

All They Told You About Money Printing Is Really, Really Wrong

By The Macro Compass

  • Without properly understanding money, it’s basically impossible to connect the countless dots of the global macro puzzle.
  • Yet, we assume we know all about money: universities and mainstream economic courses teach us that governments need money to fund their spending, Central Banks have the authority to print money we use, and commercial banks lend and multiply customers’ money in a fractional reserve banking system.
  • That’s literally all wrong. Our monetary and credit system envisages two distinct tiers of money: real-economy money (potentially inflationary) and financial-sector money (potentially asset-price inflationary).

Malaysia: PM Anwar Ibrahim Has a Lifetime of Experience to Deliver Unity & Progress

By Prasenjit K. Basu

  • Markets are right to hail Anwar’s appointment as PM, as his multi-racial vision fits perfectly with the federalist ideas that Sabah-Sarawak desire, which will lend stability to his government. 
  • Anwar should have been Malaysia’s 5th PM, not its 10th. But his multi-racial approach, and commitment to fighting cronyism, support of the poor and simplicity among ministers have been consistent.
  • Anwar seeks a cleaner, more internationally-linked and fiscally responsible Malaysia. With the levers of power in his hand, he will deliver this during a single 5-year term. We are bullish. 

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Nov 28
0

Daily Brief Event-Driven: CSI 500 Index Rebalance: 50 Changes a Side Leads to 12%+ One-Way Turnover and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • CSI 500 Index Rebalance: 50 Changes a Side Leads to 12%+ One-Way Turnover
  • Sembcorp Marine Takeover of Keppel O&M – Almost There
  • SSE180/​​​SSE380 Index Rebalance: Changes & Potential MSCI/FTSE Inclusions & Exclusions
  • KOSPI 200 Sector/Size & KRX 300 Sector: Constituent Changes & Trading Points
  • Merger Arb Mondays (28 Nov) – Yashili, Perpetual/Pendal, Nitro, Warrego, Chip Eng Seng

CSI 500 Index Rebalance: 50 Changes a Side Leads to 12%+ One-Way Turnover

By Brian Freitas

  • There are 50 changes a side for the CSI 500 Index at the upcoming rebalance that will be implemented at the close of trading on 9 December.
  • One-Way turnover at the rebalance is estimated at 12.64% leading to a one-way trade of CNY 9.3bn. The Materials, Information Technology and Consumer Discretionary sectors are net gainers.
  • 9 adds to the CSI 500 Index are deletes from the CSI 300 Index while 7 deletes from the CSI 500 Index are adds to the CSI 300 Index.

Sembcorp Marine Takeover of Keppel O&M – Almost There

By Travis Lundy

  • Last Wednesday, Keppel Corp (KEP SP) announced 8 Dec as the EGM date for shareholders to approve the AssetCo Transfer, the Keppel O&M/SMM combo, and the distribution of SMM shares.
  • This should probably sail through. Investors who want to submit questions in advance can email [email protected] by 3pm 30 Nov.
  • I still like Keppel. I think investors will find it attractive post-spin.

SSE180/​​​SSE380 Index Rebalance: Changes & Potential MSCI/FTSE Inclusions & Exclusions

By Brian Freitas

  • There are 18 changes to the SSE180 Index and 38 changes to the SSE380 Index that will be implemented at the close of trading on 9 December.
  • There will be 10 deletions from the MSCI Standard Index and 26 deletions from the FTSE All-World/All-Cap indices at the close on 9 December.
  • Currently, 8 stocks meet the threshold/are close for inclusion in the MSCI China Index while there are 21 stocks that meet the threshold for inclusion in the FTSE All-World/All-Cap indices.

KOSPI 200 Sector/Size & KRX 300 Sector: Constituent Changes & Trading Points

By Sanghyun Park

  • The additional Lotte Confectionery/Samyang Holdings flow will come from K200/KRX 300 Consumer Staples, K200 MidSmallCap, and K200 Ex-Top. However, the actual flow impact wouldn’t be significant.
  • From a flow trading standpoint, the KOSPI 50’s HMM/Hanon System probably deserves our attention because additional inflows come from the pensions that account for more than half of local PASSIVE.
  • Since their rebalancing trading tends to be somewhat dispersed, the return rate was the best when the position holding period was from T-3 to the effective date.

Merger Arb Mondays (28 Nov) – Yashili, Perpetual/Pendal, Nitro, Warrego, Chip Eng Seng

By Arun George

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Nov 28
0

Daily Brief Crypto: Zero-Knowledge Rollups and more

By | Crypto, Daily Briefs

In today’s briefing:

  • Zero-Knowledge Rollups

Zero-Knowledge Rollups

By Etherbridge

  • Over the past few weeks, we have covered some of the leading projects trying to help Ethereum scale, including Polygon, Optimism and Arbitrum.
  • Optimism and Arbitrum have used optimistic rollups as a scaling solution, while Polygon has taken a broader approach and allows developers to choose which solution suits them best.
  • Yet, they are all exploring how they could use Zero-knowledge rollups (ZK-rollups) to scale Ethereum in one form or another. 

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Nov 28
0

Daily Brief Equity Bottom-Up: CGN New Energy Holdings: Character Building and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • CGN New Energy Holdings: Character Building
  • Meituan: New Reporting Structure Conceals Loss-Making Businesses and Hard to Assess Core Businesses
  • Kakaku.com Inc.: A Deep-Dive View
  • 2023 High Conviction: J-Power Stands Out As Japan Goes Carbon Neutral
  • BeiGene (6160.HK/BGNE.US) 22Q3 – The Price of Being an “Outlier”
  • China Gas Holdings (384 HK): Still Not Meeting Expectations
  • Bosideng (3998 HK): Decent Result Distorted by Impairment Losses
  • Convenience is King

CGN New Energy Holdings: Character Building

By David Blennerhassett

  • A “valuation system with Chinese characteristics” has the media, ostensibly, discussing whether this implies a premium for SOEs and companies aligned with national goals.
  • In early 2020, SOE-backed clean energy play CGN New Energy Holdings (1811 HK) was subject to a potential privatisation from its parent; but it failed to materialise. 
  • During the 14th and 15th Five-Year Plans (2021-30) period, China’s installed capacity for wind and solar power is expected double.

Meituan: New Reporting Structure Conceals Loss-Making Businesses and Hard to Assess Core Businesses

By Shifara Samsudeen, ACMA, CGMA

  • Meituan reported 3Q2022 results. Revenue increased 28.2% YoY to RMB62.6bn (vs consensus RMB62.3bn) while reported an OP of RMB988m (consensus OP loss of RMB935m) for the first time since 3Q2019.
  • However, on adjusted basis, Meituan made an adjusted operating loss of RMB1.1bn (1.7% of revenue) of revenues compared to an adjusted operating loss of RMB7.7bn (15.1% of revenue) in 3Q2022.
  • Tencent announced that it will distribute majority of its shareholding on Meituan (3690 HK) to its shareholders in dividends and Naspers is expected to sell the Meituan Shares it receives from Tencent.

Kakaku.com Inc.: A Deep-Dive View

By Steven Chen

  • Kakaku.com Inc. can be a rare species among listed companies in Japan;
  • We had multiple email exchanges and meetings with the management team for a deep-dive view covering corporate cultural, management style, capital allocation, business model, and competitive strength.
  • We would wait for a 20%-30% pullback in the share price before looking to add to our position but would certainly remain reluctant to sell any share that we own.

2023 High Conviction: J-Power Stands Out As Japan Goes Carbon Neutral

By Oshadhi Kumarasiri

  • Operating under the brand name J-Power, Electric Power Development C (9513 JP) is leading Japan’s efforts to make carbon dioxide-free electricity by 2050.
  • The company’s investments in gasification and carbon dioxide separation technology and carbon dioxide-free hydrogen generation from coal are close to commercialisation.
  • With the technology to serve other power producers to develop their own environmentally-friendly power projects, J-Power could turn into a global-leader in the power generation space in the next decade.

BeiGene (6160.HK/BGNE.US) 22Q3 – The Price of Being an “Outlier”

By Xinyao (Criss) Wang

  • Our forecast of the total peak sales of BRUKINSA, tislelizumab and the rest commercialized products is about RMB10 billion, which is not enough for BeiGene to turn losses into profits. 
  • BeiGene has the highest R&D/academic ability among domestic pharmaceutical enterprises,but BeiGene cannot be assessed according to the standards of Chinese pharmaceutical enterprises due to its fundamentally different cost structure/breakeven point.
  • The current market value has already priced in the success of TIGIT project to some extent. In other words, the upward elasticity may be limited. But BeiGene deserves long-term follow.

China Gas Holdings (384 HK): Still Not Meeting Expectations

By Osbert Tang, CFA

  • While China Gas Holdings (384 HK) expects better gas dollar margin HoH, there are still high profit uncertainties and its full-year operational guidance does not look exciting.
  • The expectation of flat to 10% YoY decline in new residential household connections is not encouraging. With 1H FY23 profit only amounted to 42% of consensus, we see downgrade risks.
  • Despite achieving positive free cash flow, its high gearing of 69.9% (+4pp HoH) is still very stretched relative to peers. We prefer Kunlun Energy (135 HK).

Bosideng (3998 HK): Decent Result Distorted by Impairment Losses

By Osbert Tang, CFA

  • Amid the challenging market, Bosideng International Holdings (3998 HK)‘s 15% growth in 1H FY23 profit is decent. Excluding impairments, operating profit would have grown by 31.3%.
  • It expects FY23 gross margin to expand and further store optimisation to enhance operating margin. The introduction of highly successful ultralight down jackets is an added driver.
  • With 32% increase in online branded apparel sales, the channel will be Bosideng’s key growth impetus. For “double-11”, sales have outperformed peers significantly, showcasing its product strengths.

Convenience is King

By subSPAC

  • Companies that went public through SPACs in 2020 and 2021 have struggled this year due to inflation and, most recently, a weakening economy.
  • SPACs have gotten a bad reputation for making unproven, unprofitable companies public, ultimately leading to a majority underperforming the broader market and a few even going out of business soon after their debut.
  • However, SPACs have also taken established companies public, like convenience store chain operator Arko, which has relatively fared better.

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Nov 28
0

Most Read: ENN Natural Gas, Jafco Co Ltd, Nomura Research Institute Ltd, King’s Town Bank, Trina Solar Co Ltd, Shanghai United Imaging Healthcare, Zhejiang Longsheng Group Co.,, Keppel Corp, Beijing-Shanghai High Speed Railway-A, Socionext and more

By | Daily Briefs, Most Read

In today’s briefing:

  • CSI300 Index Rebalance: The Surprises Could Outperform
  • JAFCO (8595) Yields to Murakami Greenmail – Big Asset Sale, Big Buyback
  • Nomura Research Institute (4307) Large Secondary Offering – Demand Profile and Index Implications
  • Index Rebalance & ETF Flow Recap: NKY, FTSE AW/CH50/TW50/Div+, Sensex, KLCI, SET50, HSTECH, Huarong
  • SSE50 Index Rebalance: In Line with Forecasts; Trades Performing Well
  • STAR50 Index Rebalance: Adds Outperform Deletes in the Last Week
  • CSI 500 Index Rebalance: 50 Changes a Side Leads to 12%+ One-Way Turnover
  • Sembcorp Marine Takeover of Keppel O&M – Almost There
  • SSE180/​​​SSE380 Index Rebalance: Changes & Potential MSCI/FTSE Inclusions & Exclusions
  • Socionext (6526 JP) TOPIX Inclusion – Great Performer Deserves Profit-Taking

CSI300 Index Rebalance: The Surprises Could Outperform

By Brian Freitas

  • There are 15 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) at the upcoming rebalance that will be implemented at the close of trading on 9 December.
  • While most of the deletions are in line with forecasts, there are a few differences on the inclusions as the index committee has used its discretion to overlook some names.
  • The Industrials, Materials and Utilities sectors gain index spots at the expense of Health Care, Financials, Consumer Staples and Consumer Discretionary.

JAFCO (8595) Yields to Murakami Greenmail – Big Asset Sale, Big Buyback

By Travis Lundy

  • Jafco Co Ltd (8595 JP) has long been known as a “cheap” listed “venture fund” because of its additional large (for it) holding in Nomura Research Institute Ltd (4307 JP).
  • Well-Known Japanese activist Yoshiaki MURAKAMI and his related companies bought a stake. JAFCO responded with a “Policy” (poison pill). Murakami-san ducked and dodged then bought more. Now the exit. 
  • JAFCO will sell its Nomura Research shares in a Secondary Offering, and conduct a large buyback via tender offer. Like other Murakami exits, this one is not designed for you. 

Nomura Research Institute (4307) Large Secondary Offering – Demand Profile and Index Implications

By Travis Lundy

  • On Friday, Nomura Research Institute Ltd (4307 JP) announced that Jafco Co Ltd (8595 JP) and Nomura Holdings (8604 JP) would each sell NRI shares in a Secondary Offering.
  • JAFCO is selling to fund a giant buyback. Nomura is selling to round out the offering size. The total is 37mm shares plus greenshoe of 5.5mm shares. 
  • At Friday’s price that is ~¥140bn (including greenshoe), 7% of shares out, 10% of float, and about 25% of Real World Float. There are index implications.

Index Rebalance & ETF Flow Recap: NKY, FTSE AW/CH50/TW50/Div+, Sensex, KLCI, SET50, HSTECH, Huarong

By Brian Freitas

SSE50 Index Rebalance: In Line with Forecasts; Trades Performing Well

By Brian Freitas

  • There are 5 changes for the SSE50 Index that will be implemented at the close on 9 December. Passive selling on a few deletions is pretty large.
  • We estimate a one-way turnover of 4.07% at the December rebalance leading to a one-way trade of CNY 3.36bn. Index arb activity could add to the impact on the stocks.
  • The adds have dropped over the last few months while the deletes have moved higher. There could be a reversion of that trend till implementation of the changes.

STAR50 Index Rebalance: Adds Outperform Deletes in the Last Week

By Brian Freitas

  • The index committee has continued to use a 6-month minimum listing history leading to five changes to the SSE STAR50 (STAR50 INDEX) in December.
  • All changes are in line with our forecasts and there appears to be some pre-positioning over the last week as the deletes have sold off hard.
  • One-Way turnover is estimated at 5.34% and will result in a one-way trade of CNY 3,766m. The estimated impact on the deletes is higher than that on the adds.

CSI 500 Index Rebalance: 50 Changes a Side Leads to 12%+ One-Way Turnover

By Brian Freitas

  • There are 50 changes a side for the CSI 500 Index at the upcoming rebalance that will be implemented at the close of trading on 9 December.
  • One-Way turnover at the rebalance is estimated at 12.64% leading to a one-way trade of CNY 9.3bn. The Materials, Information Technology and Consumer Discretionary sectors are net gainers.
  • 9 adds to the CSI 500 Index are deletes from the CSI 300 Index while 7 deletes from the CSI 500 Index are adds to the CSI 300 Index.

Sembcorp Marine Takeover of Keppel O&M – Almost There

By Travis Lundy

  • Last Wednesday, Keppel Corp (KEP SP) announced 8 Dec as the EGM date for shareholders to approve the AssetCo Transfer, the Keppel O&M/SMM combo, and the distribution of SMM shares.
  • This should probably sail through. Investors who want to submit questions in advance can email [email protected] by 3pm 30 Nov.
  • I still like Keppel. I think investors will find it attractive post-spin.

SSE180/​​​SSE380 Index Rebalance: Changes & Potential MSCI/FTSE Inclusions & Exclusions

By Brian Freitas

  • There are 18 changes to the SSE180 Index and 38 changes to the SSE380 Index that will be implemented at the close of trading on 9 December.
  • There will be 10 deletions from the MSCI Standard Index and 26 deletions from the FTSE All-World/All-Cap indices at the close on 9 December.
  • Currently, 8 stocks meet the threshold/are close for inclusion in the MSCI China Index while there are 21 stocks that meet the threshold for inclusion in the FTSE All-World/All-Cap indices.

Socionext (6526 JP) TOPIX Inclusion – Great Performer Deserves Profit-Taking

By Travis Lundy

  • Socionext (6526 JP) was offered in a range of ¥3,480-3,650, oversubscribed, IPOed at ¥3,650 and closed ¥4200 on Day 1. We can assume that was the “right price.” 
  • Since then, while peers are up 19.8% in the 6 weeks since then, Socionext is up 66%. This year’s biggest Japan IPO has been a big winner.
  • The TOPIX inclusion is on Tuesday at the close. Beware, you don’t know who is in the stock and who is not.

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Nov 28
0

Daily Brief Financials: Ethereum and more

By | Daily Briefs, Financials

In today’s briefing:

  • Zero-Knowledge Rollups

Zero-Knowledge Rollups

By Etherbridge

  • Over the past few weeks, we have covered some of the leading projects trying to help Ethereum scale, including Polygon, Optimism and Arbitrum.
  • Optimism and Arbitrum have used optimistic rollups as a scaling solution, while Polygon has taken a broader approach and allows developers to choose which solution suits them best.
  • Yet, they are all exploring how they could use Zero-knowledge rollups (ZK-rollups) to scale Ethereum in one form or another. 

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Nov 28
0

Daily Brief Industrials: Keppel Corp, Beijing-Shanghai High Speed Railway-A, HMM Co., Ltd. and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Sembcorp Marine Takeover of Keppel O&M – Almost There
  • SSE180/​​​SSE380 Index Rebalance: Changes & Potential MSCI/FTSE Inclusions & Exclusions
  • KOSPI 200 Sector/Size & KRX 300 Sector: Constituent Changes & Trading Points

Sembcorp Marine Takeover of Keppel O&M – Almost There

By Travis Lundy

  • Last Wednesday, Keppel Corp (KEP SP) announced 8 Dec as the EGM date for shareholders to approve the AssetCo Transfer, the Keppel O&M/SMM combo, and the distribution of SMM shares.
  • This should probably sail through. Investors who want to submit questions in advance can email [email protected] by 3pm 30 Nov.
  • I still like Keppel. I think investors will find it attractive post-spin.

SSE180/​​​SSE380 Index Rebalance: Changes & Potential MSCI/FTSE Inclusions & Exclusions

By Brian Freitas

  • There are 18 changes to the SSE180 Index and 38 changes to the SSE380 Index that will be implemented at the close of trading on 9 December.
  • There will be 10 deletions from the MSCI Standard Index and 26 deletions from the FTSE All-World/All-Cap indices at the close on 9 December.
  • Currently, 8 stocks meet the threshold/are close for inclusion in the MSCI China Index while there are 21 stocks that meet the threshold for inclusion in the FTSE All-World/All-Cap indices.

KOSPI 200 Sector/Size & KRX 300 Sector: Constituent Changes & Trading Points

By Sanghyun Park

  • The additional Lotte Confectionery/Samyang Holdings flow will come from K200/KRX 300 Consumer Staples, K200 MidSmallCap, and K200 Ex-Top. However, the actual flow impact wouldn’t be significant.
  • From a flow trading standpoint, the KOSPI 50’s HMM/Hanon System probably deserves our attention because additional inflows come from the pensions that account for more than half of local PASSIVE.
  • Since their rebalancing trading tends to be somewhat dispersed, the return rate was the best when the position holding period was from T-3 to the effective date.

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Nov 28
0

Daily Brief Utilities: CGN New Energy Holdings, Electric Power Development C, China Gas Holdings and more

By | Daily Briefs, Utilities Sector

In today’s briefing:

  • CGN New Energy Holdings: Character Building
  • 2023 High Conviction: J-Power Stands Out As Japan Goes Carbon Neutral
  • China Gas Holdings (384 HK): Still Not Meeting Expectations

CGN New Energy Holdings: Character Building

By David Blennerhassett

  • A “valuation system with Chinese characteristics” has the media, ostensibly, discussing whether this implies a premium for SOEs and companies aligned with national goals.
  • In early 2020, SOE-backed clean energy play CGN New Energy Holdings (1811 HK) was subject to a potential privatisation from its parent; but it failed to materialise. 
  • During the 14th and 15th Five-Year Plans (2021-30) period, China’s installed capacity for wind and solar power is expected double.

2023 High Conviction: J-Power Stands Out As Japan Goes Carbon Neutral

By Oshadhi Kumarasiri

  • Operating under the brand name J-Power, Electric Power Development C (9513 JP) is leading Japan’s efforts to make carbon dioxide-free electricity by 2050.
  • The company’s investments in gasification and carbon dioxide separation technology and carbon dioxide-free hydrogen generation from coal are close to commercialisation.
  • With the technology to serve other power producers to develop their own environmentally-friendly power projects, J-Power could turn into a global-leader in the power generation space in the next decade.

China Gas Holdings (384 HK): Still Not Meeting Expectations

By Osbert Tang, CFA

  • While China Gas Holdings (384 HK) expects better gas dollar margin HoH, there are still high profit uncertainties and its full-year operational guidance does not look exciting.
  • The expectation of flat to 10% YoY decline in new residential household connections is not encouraging. With 1H FY23 profit only amounted to 42% of consensus, we see downgrade risks.
  • Despite achieving positive free cash flow, its high gearing of 69.9% (+4pp HoH) is still very stretched relative to peers. We prefer Kunlun Energy (135 HK).

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Nov 28
0

Daily Brief Energy/Materials: Zhejiang Longsheng Group Co.,, Growatt Technology, Indika Energy and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • CSI 500 Index Rebalance: 50 Changes a Side Leads to 12%+ One-Way Turnover
  • Growatt Technology IPO: Valuation First Look
  • Morning Views Asia: Indika Energy, Meituan

CSI 500 Index Rebalance: 50 Changes a Side Leads to 12%+ One-Way Turnover

By Brian Freitas

  • There are 50 changes a side for the CSI 500 Index at the upcoming rebalance that will be implemented at the close of trading on 9 December.
  • One-Way turnover at the rebalance is estimated at 12.64% leading to a one-way trade of CNY 9.3bn. The Materials, Information Technology and Consumer Discretionary sectors are net gainers.
  • 9 adds to the CSI 500 Index are deletes from the CSI 300 Index while 7 deletes from the CSI 500 Index are adds to the CSI 300 Index.

Growatt Technology IPO: Valuation First Look

By Arun George

Morning Views Asia: Indika Energy, Meituan

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.

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Nov 28
0

Daily Brief TMT/Internet: Nomura Research Institute Ltd, Kakaku.com Inc, Meituan and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Nomura Research Institute (4307) Large Secondary Offering – Demand Profile and Index Implications
  • Kakaku.com Inc.: A Deep-Dive View
  • Meituan: New Reporting Structure Conceals Loss-Making Businesses and Hard to Assess Core Businesses
  • Nomura Research Placement – Somewhat Well Flagged, past Deals Have Done Well but Momentum Is Weak

Nomura Research Institute (4307) Large Secondary Offering – Demand Profile and Index Implications

By Travis Lundy

  • On Friday, Nomura Research Institute Ltd (4307 JP) announced that Jafco Co Ltd (8595 JP) and Nomura Holdings (8604 JP) would each sell NRI shares in a Secondary Offering.
  • JAFCO is selling to fund a giant buyback. Nomura is selling to round out the offering size. The total is 37mm shares plus greenshoe of 5.5mm shares. 
  • At Friday’s price that is ~¥140bn (including greenshoe), 7% of shares out, 10% of float, and about 25% of Real World Float. There are index implications.

Kakaku.com Inc.: A Deep-Dive View

By Steven Chen

  • Kakaku.com Inc. can be a rare species among listed companies in Japan;
  • We had multiple email exchanges and meetings with the management team for a deep-dive view covering corporate cultural, management style, capital allocation, business model, and competitive strength.
  • We would wait for a 20%-30% pullback in the share price before looking to add to our position but would certainly remain reluctant to sell any share that we own.

Meituan: New Reporting Structure Conceals Loss-Making Businesses and Hard to Assess Core Businesses

By Shifara Samsudeen, ACMA, CGMA

  • Meituan reported 3Q2022 results. Revenue increased 28.2% YoY to RMB62.6bn (vs consensus RMB62.3bn) while reported an OP of RMB988m (consensus OP loss of RMB935m) for the first time since 3Q2019.
  • However, on adjusted basis, Meituan made an adjusted operating loss of RMB1.1bn (1.7% of revenue) of revenues compared to an adjusted operating loss of RMB7.7bn (15.1% of revenue) in 3Q2022.
  • Tencent announced that it will distribute majority of its shareholding on Meituan (3690 HK) to its shareholders in dividends and Naspers is expected to sell the Meituan Shares it receives from Tencent.

Nomura Research Placement – Somewhat Well Flagged, past Deals Have Done Well but Momentum Is Weak

By Sumeet Singh

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