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Smartkarma Daily Briefs

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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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 Health Care: BeiGene Ltd and more

By | Daily Briefs, Healthcare

In today’s briefing:

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

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.

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Nov 28
0

Daily Brief Consumer: Yashili International Holdings, Bosideng International Holdings, Arko Corp and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Merger Arb Mondays (28 Nov) – Yashili, Perpetual/Pendal, Nitro, Warrego, Chip Eng Seng
  • Bosideng (3998 HK): Decent Result Distorted by Impairment Losses
  • Convenience is King

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

By Arun George

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

Daily Brief South Korea: HMM Co., Ltd. and more

By | Daily Briefs, South Korea

In today’s briefing:

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

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 United States: Ethereum, Arko Corp and more

By | Daily Briefs, United States

In today’s briefing:

  • Zero-Knowledge Rollups
  • Convenience is King

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. 

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

Daily Brief Indonesia: Indika Energy and more

By | Daily Briefs, Indonesia

In today’s briefing:

  • Morning Views Asia: Indika Energy, Meituan

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 Singapore: Keppel Corp and more

By | Daily Briefs, Singapore

In today’s briefing:

  • Sembcorp Marine Takeover of Keppel O&M – Almost There

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.

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