Smartkarma Daily Briefs

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.

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

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.

Nitori Retreats from the US but Gets Muscular in Japan and Asia

By Michael Causton

Nitori is one of few Japanese retailers to brave the US market. The US has beaten Nitori for now and it will instead focus on Japan and Asia.
Nitori’s ability to leverage its efficient supply chains to lower prices will likely lead it to further dominance at home and allow it to invest in the rest of Asia.
The company expects pressures on costs to ease in 2023 as the Yen rises but is working on reducing the cost of goods and operations.

Shionogi & Co (4507 JP): Oral COVID-19 Drug Got Approval; Files Approval for COVID-19 Vaccine

By Tina Banerjee

On November 22, Shionogi & Co (4507 JP) received emergency regulatory approval for Xocova in Japan for COVID-19. It is Japan’s first homegrown oral antiviral for SARS-CoV-2 infection.
On November 24, Shionogi has filed for manufacturing and sales approval of S-268019, a recombinant protein-based preventive vaccine, for use in priming and booster (third) doses, against COVID-19.
Although Shionogi continues to expect ¥110 billion revenue from COVID-19-related products in FY23, the company has raised overall revenue guidance to ¥410 billion from ¥400 billion.

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Nov 27

Daily Brief Industrials: Hong Kong Hang Seng Index, JL Mag Rare Earth, Keppel Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
Hong Kong CEO & Director Dealings (25 Nov): JL Mag Rare Earth, Joinn Laboratories, Hopefluent
Weekly Deals Digest (27 Nov) – Keppel, Chip Eng Seng, Link Admin, DTAC/True, Growatt, Weilong

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

Hong Kong CEO & Director Dealings (25 Nov): JL Mag Rare Earth, Joinn Laboratories, Hopefluent

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 JL Mag Rare Earth (6680 HK), Joinn Laboratories (6127 HK), and Hopefluent Group (733 HK).

Weekly Deals Digest (27 Nov) – Keppel, Chip Eng Seng, Link Admin, DTAC/True, Growatt, Weilong

By Arun George

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – Lygend Resources & Technology (2245 HK) raised US$470 million, Growatt Technology (1833969D CH) and Weilong Delicious Global (WDG HK) pre-market IPOs.
Event-Driven developments –Chip Eng Seng Corp (CHIP SP), Keppel Corp (KEP SP), Singapore Medical (SMG SP), Link Administration (LNK AU), Pendal Group (PDL AU), Nitro Software Ltd (NTO AU), DTAC/True.

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Nov 27

Daily Brief Industrials: Hong Kong Hang Seng Index, JL Mag Rare Earth, Keppel Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
Hong Kong CEO & Director Dealings (25 Nov): JL Mag Rare Earth, Joinn Laboratories, Hopefluent
Weekly Deals Digest (27 Nov) – Keppel, Chip Eng Seng, Link Admin, DTAC/True, Growatt, Weilong

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

Hong Kong CEO & Director Dealings (25 Nov): JL Mag Rare Earth, Joinn Laboratories, Hopefluent

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 JL Mag Rare Earth (6680 HK), Joinn Laboratories (6127 HK), and Hopefluent Group (733 HK).

Weekly Deals Digest (27 Nov) – Keppel, Chip Eng Seng, Link Admin, DTAC/True, Growatt, Weilong

By Arun George

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – Lygend Resources & Technology (2245 HK) raised US$470 million, Growatt Technology (1833969D CH) and Weilong Delicious Global (WDG HK) pre-market IPOs.
Event-Driven developments –Chip Eng Seng Corp (CHIP SP), Keppel Corp (KEP SP), Singapore Medical (SMG SP), Link Administration (LNK AU), Pendal Group (PDL AU), Nitro Software Ltd (NTO AU), DTAC/True.

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Nov 27

Daily Brief Utilities: ENN Natural Gas and more

By Smartkarma Daily Briefs | Daily Briefs, Utilities Sector

In today’s briefing:

CSI300 Index Rebalance: The Surprises Could Outperform

CSI300 Index Rebalance: The Surprises Could Outperform

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.

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Nov 27

Daily Brief TMT/Internet: Trina Solar Co Ltd, Alibaba (ADR), Socionext, Meituan and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

SSE50 Index Rebalance: In Line with Forecasts; Trades Performing Well
ECM Weekly (27th Nov 2022) – Growatt, Lygend, Sunshine Ins, Weilong, DPC, Daiei, Skymark, GoTo
Socionext (6526 JP) TOPIX Inclusion – Great Performer Deserves Profit-Taking
Last Week in Event SPACE: Meituan, Link Admin/Pexa, DTAC/True, Medley
Meituan 105 Buy Support

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

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.

ECM Weekly (27th Nov 2022) – Growatt, Lygend, Sunshine Ins, Weilong, DPC, Daiei, Skymark, GoTo

By Sumeet Singh

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
On the IPO front, things are picking up again going into the year end.
There were no large placement or blocks this week, although prior lockup linked blocks kept flowing through.

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

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.

Last Week in Event SPACE: Meituan, Link Admin/Pexa, DTAC/True, Medley

You could imagine people covering their short in Meituan (3690 HK) now. The Hang Seng sell flow on 4 January 2023 is insignificant. But there will be more overhang later.
If you buy Link Administration (LNK AU) outright, you are buying a package of three potential future takeout targets.
It’s not certain the scrip terms will continue as stated in the DTAC /True merger, but if they change at all, that would almost certainly require a new shareholder meeting.

Meituan 105 Buy Support

By Thomas Schroeder

Meituan (3690 HK) has some big resistance hurdles to overcome and will act as tactical sell levels to seek out the 105 buy zone.
A tactical bounce back to 165 is on the cards with 168/75 the high degree sell barrier. Secondary trendline resistance rests near 185 as the bigger sell zone.
The bearish rising wedge stands out as the dominant force. The support break warns of fallout after a bounce attempt back to 168. A weak bounce would turn near 160.

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Nov 27

Daily Brief Health Care: Shanghai United Imaging Healthcare, Wuxi Biologics, Shionogi & Co, Yichang HEC Changjiang Pharma and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

STAR50 Index Rebalance: Adds Outperform Deletes in the Last Week
China Healthcare Weekly (Nov25)-Wuxi Biologics, Valuation Logic Changed by NRDL, Biotech Model Fails
Shionogi & Co (4507 JP): Oral COVID-19 Drug Got Approval; Files Approval for COVID-19 Vaccine
HEC Pharma (1558 HK): Core Product Saw Volume Recovery in 1H 2022; New Launches to Accelerate Growth

STAR50 Index Rebalance: Adds Outperform Deletes in the Last Week

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.

China Healthcare Weekly (Nov25)-Wuxi Biologics, Valuation Logic Changed by NRDL, Biotech Model Fails

By Xinyao (Criss) Wang

NRDL negotiation has completely changed the pricing method/valuation logic of innovative drugs. Even if price reduction could be milder this year, it’s hard to reverse the shrinking market size/slowing growth.
Wuxi Biologics (2269 HK) has successively acquired several factories/production facilities built by domestic biotech companies at low cost. However, we have several concerns.
The industry is in the process of understanding and adapting to various changes. The model capital envisioned for biotech to both develop and then commercialize drugs successfully doesn’t work anymore.

Shionogi & Co (4507 JP): Oral COVID-19 Drug Got Approval; Files Approval for COVID-19 Vaccine

By Tina Banerjee

On November 22, Shionogi & Co (4507 JP) received emergency regulatory approval for Xocova in Japan for COVID-19. It is Japan’s first homegrown oral antiviral for SARS-CoV-2 infection.
On November 24, Shionogi has filed for manufacturing and sales approval of S-268019, a recombinant protein-based preventive vaccine, for use in priming and booster (third) doses, against COVID-19.
Although Shionogi continues to expect ¥110 billion revenue from COVID-19-related products in FY23, the company has raised overall revenue guidance to ¥410 billion from ¥400 billion.

HEC Pharma (1558 HK): Core Product Saw Volume Recovery in 1H 2022; New Launches to Accelerate Growth

By Tina Banerjee

During H1 2022, Yichang HEC Changjiang Pharma (1558 HK) recorded revenue of RMB1.3 billion, representing 540% y/y growth, driven by 1,776% y/y revenue growth from its core product Kewei.
With gradual recovery of patient traffic in medical institutions and increasing number of flu cases, Kewei showed a trend of recovery in its sales volume leveraging on its market leadership.
HEC Pharma has a comprehensive insulin portfolio, which covers both second and third generations of insulin. With 116 million diabetes patients, China has significant market opportunity for insulin.

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Nov 27

Daily Brief Financials: King’s Town Bank, Jafco Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Index Rebalance & ETF Flow Recap: NKY, FTSE AW/CH50/TW50/Div+, Sensex, KLCI, SET50, HSTECH, Huarong
JAFCO (8595) Yields to Murakami Greenmail – Big Asset Sale, Big Buyback

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

There were a lot of review cutoffs last Monday and a lot of announcements for China indexes post market close on Friday.
The coming week has announcements for the FTSE country indices as well as implementation for the MSCI indices and the Hang Seng family of indexes.
Big inflows to MSCI Korea, iShares MSCI ACWI ETF (ACWI US) and iShares MSCI Emerging Markets (EMXC US); outflows for Tracker Fund of Hong Kong Ltd (2800 HK).

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

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.

💡 Before it’s here, it’s on Smartkarma

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

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

Nov 27

Daily Brief Consumer: Cisarua Mountain Dairy, Lifestyle International Holdings, Melco Resorts & Entertainment, Nitori Holdings and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Cisarua Mountain Dairy (CMRY IJ) – Fuelled by General Trade and Miss Cimory
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Chip Eng Seng, Mori Trust, Pendal/Pendal, DTAC/True
Asia Gaming: Despite Macau Woes, Melco Stock Is Too Cheap to Ignore Now
Nitori Retreats from the US but Gets Muscular in Japan and Asia

Cisarua Mountain Dairy (CMRY IJ) – Fuelled by General Trade and Miss Cimory

By Angus Mackintosh

Cisarua Mountain Dairy (CMRY IJ) remains one of Indonesia’s most interesting high-quality consumer staples companies, with strong brands in both premium dairy products and premium packaged foods.
The company grew total sales by 76% YoY for 9M2022, with dairy products growing 51% YoY and packaged foods by 125% YoY driven by increasing capacity to serve burgeoning demand.
Margins have been impacted by rising raw material prices but powdered milk prices have been falling which should mean margins recover but all the same 9M2022 net profit rose 1.5x.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Chip Eng Seng, Mori Trust, Pendal/Pendal, DTAC/True