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Smartkarma Daily Briefs

Nov 24
0

Daily Brief Singapore: Keppel Corp, Grab and more

By | Daily Briefs, Singapore

In today’s briefing:

  • Keppel (KEP SP) Vote on Keppel O&M and Sembcorp Marine Transaction on 8 Dec
  • Grab (GRAB US) – Shifting Down a Gear for A Steep Ascent

Keppel (KEP SP) Vote on Keppel O&M and Sembcorp Marine Transaction on 8 Dec

By Arun George

  • Keppel Corp (KEP SP)’s EGM on 8 December requires majority shareholder approval of two ordinary resolutions. The IFA notes that the transaction terms are “not prejudicial” to minorities.
  • Keppel shareholders will be supportive due to attractive terms. The other key conditions precedent is Sembcorp Marine (SMM SP) shareholders and regulatory approvals (SGX-ST and Maritime Port Authority of Singapore). 
  • The deal is expected to close by the end of the year. Our Keppel SoTP valuation is S$8.30 per share, which is 12% above the last close.

Grab (GRAB US) – Shifting Down a Gear for A Steep Ascent

By Angus Mackintosh

  • Grab‘s recent results reflect a change of pace in terms of moving along the path to profitability with a more disciplined approach to incentives and a focus on cost controls. 
  • Deliveries segment adjusted EBITDA turned positive for the first time, 3Qs ahead of previous guidance, and food 2Qs ahead of guidance both of which are positives.
  • A continuing drag will likely continue to come from expenses related to the buildout of its three digibanks. Grab‘s headline EBITDA is not forecast to be positive until 2025. 

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Nov 24
0

Daily Brief United States: Russell 2000 Index, Oracle Corp, Intl Flavors & Fragrances, Inter Parfums, Blackline Inc, Broadridge Financial Solutions, Inc and more

By | Daily Briefs, United States

In today’s briefing:

  • Small- And Mid-Cap Indexes Poised to Break Out?; Further Upside Expected; Buys Within Cyclicals
  • Oracle Corporation (ORCL US): TSS Recommendation Closed After One Week (-4.5%)
  • International Flavors & Fragrances Inc.: Initiation of Coverage – Business Strategy & Other Drivers
  • IPAR: Guidance Removes Overhang
  • BlackLine Inc.: Initiation of Coverage – Customer Attractiveness Scoring & Other Drivers
  • International Flavors & Fragrances Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report
  • Broadridge Financial Solutions Inc.: Initiation of Coverage – Industry Dynamics & Key Drivers
  • Broadridge Financial Solutions Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report

Small- And Mid-Cap Indexes Poised to Break Out?; Further Upside Expected; Buys Within Cyclicals

By Joe Jasper

  • Despite $IWM already hitting our price target at 200-day MA/YTD downtrend, and the $SPX getting to within 1% of our target at 200-day MA, we see this 1.5-month rally continuing.
  • We expect further upside as long as the 1.5-month uptrend channels remain intact on the SPX and IWM, and we believe that breakouts above their 200-day MAs could be coming
  • Breakouts above their 200-day MAs that would likely signal the end to this bear market.

Oracle Corporation (ORCL US): TSS Recommendation Closed After One Week (-4.5%)

By David Coloretti, CMT

  • The development of TSS has been a life’s work. We anticipate a high win / loss ratio and accept than not every recommendation will be profitable. 
  • On 15 November we determined that extreme ST momentum failure would likely deliver a 4.0% to 5.5% decline in ORCL US in 1-2 weeks. 
  • ORCL US failed to deliver, declining only 0.6% before closing 1 week later, on 22 November, 4.5% above our recommendation entry level. This recommendation is now closed.

International Flavors & Fragrances Inc.: Initiation of Coverage – Business Strategy & Other Drivers

By Baptista Research

  • This is our first report on International Flavors and Fragrances (IFF), one of the global market leaders in the production of cosmetic active and natural health ingredients for use in consumer products.
  • The increase in sales in the quarter was driven primarily by double-digit growth in its pharma and nourish solutions divisions.
  • In spite of its volatile market environment, IFF continues to execute its operational priorities for achieving strong bottom and top-line results.

IPAR: Guidance Removes Overhang

By Hamed Khorsand

  • IPAR continues to experience a strong consumer spending environment for fragrances where it has become increasing difficult to have all the components to manufacture a bottle
  • IPAR reported third quarter sales of $280.5 million compared to our original estimate of $275.3 million. The increase in sales was the result of a strong showing from new licenses
  • At the start of 2022, our 2022 EPS forecast was $3.05. It is now $3.40. IPAR’s stock has shown little movement for such an achievement

BlackLine Inc.: Initiation of Coverage – Customer Attractiveness Scoring & Other Drivers

By Baptista Research

  • This is our first report on BlackLine, the renowned cloud-based solutions provider for accounting and financial management operations.
  • The company delivered solid financial results in the last quarter and managed an all-around beat with good growth in revenue.
  • Moreover, continued free cash flow and margin improvement were seen due to further disciplined expense management and operating efficiencies.

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

By Baptista Research

  • International Flavors and Fragrances, commonly abbreviated as IFF, is one of the world leaders in the manufacture and distribution of cosmetic active and natural health ingredients for use in consumer products.
  • In spite of its volatile market environment, IFF continues to execute its operational priorities for achieving strong bottom and top-line results.
  • It also continues to progress against its portfolio optimization efforts, having completed successfully the divestiture of its Microbial Control business.

Broadridge Financial Solutions Inc.: Initiation of Coverage – Industry Dynamics & Key Drivers

By Baptista Research

  • This is our first report on Broadridge Financial Solutions, a major investor communications and technology-driven solutions provider for the financial services industry.
  • The company delivered a mixed set of results for the quarter meeting revenue expectations of Wall Street but missing out on earnings.
  • Given their forward testing, Broadridge anticipates steady growth in investor positions throughout the coming two quarters.

Broadridge Financial Solutions Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report

By Baptista Research

  • Broadridge Financial Solutions is a well-known investor communications and technology-driven solutions provider for the financial services industry.
  • The company has had a decent financial performance in recent times and has seen a continuous expansion in investor positions, notwithstanding the market downturn.
  • Given their forward testing capabilities, Broadridge is confident of seeing steady growth in investor positions in the coming year.

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Nov 24
0

Daily Brief India: Bharat Petroleum Corp and more

By | Daily Briefs, India

In today’s briefing:

  • NIFTY Quiddity Leaderboard Mar 23: Tata Motor DVR Could Be Included in NIFTY 100

NIFTY Quiddity Leaderboard Mar 23: Tata Motor DVR Could Be Included in NIFTY 100

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the potential ADDs/DELs for the NIFTY 50, 100, and 500 Indices in the run up to the March 2023 Rebalance.
  • In October 2022, NIFTY Indices Ltd initiated a market consultation recently on the “treatment of merger/demerger in Nifty equity indices” and its outcome has been confirmed now.
  • Separately, Tata Motors DVR (TTMT/A IN) – previously ineligible for NIFTY 100 Inclusion for liquidity reasons – could become eligible for the March 2023 Rebalance event.

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Nov 24
0

Daily Brief Japan: Mori Trust Sogo Reit, Oriental Land, Workman Co Ltd, PHC Holdings, Tokyo Stock Exchange Tokyo Price Index Topix and more

By | Daily Briefs, Japan

In today’s briefing:

  • Mori Trust Sogo – Mori Trust Hotel REIT Merger
  • Nikkei 225 Index Rebalance Preview (March): Three Potential Changes & Large Funding Trade
  • 2023 High Conviction: Workman’s Cost Performance Will Beat the Competition
  • PHC Holdings (6523 JP): Strong H1 Result; FY23 Revenue Guidance Raised; Mid-Term Plans Revised
  • Without Disclosure and Ensuring Transparency, the Black Box on Compensation Will Increase

Mori Trust Sogo – Mori Trust Hotel REIT Merger

By Travis Lundy

  • Yesterday, Mori Trust Sogo Reit (8961 JP) (MTR) and Mori Trust Hotel Reit (3478 JP) (MTH) announced a merger to be effective 1 March 2023. MTR will be the survivor.
  • The ratio is 1.00 : 0.92 MTR:MTH but MTR will conduct a 2:1 stock split on effective date to make it 1.00 : 1.84 to allow retail to continue holding.
  • This will effectively increase the size of MTR by 35%, and re-distributes earnings structure. There will be index consequences.

Nikkei 225 Index Rebalance Preview (March): Three Potential Changes & Large Funding Trade

By Brian Freitas

2023 High Conviction: Workman’s Cost Performance Will Beat the Competition

By Michael Causton

  • Although spending on non-necessities withered from March 2020 onwards, some low-cost retailers of discretionary items continued to grow. 
  • Workman’s mix of high cost performance and engagement with the ever more active outdoor market has, and will, support expansion, even if same-store sales growth has slowed.
  • Future category expansion will deliver higher same-store sales as well as top line growth. 1,500 stores (from 1,000) is certain but 2,000 is possible thanks to new categories like footwear.

PHC Holdings (6523 JP): Strong H1 Result; FY23 Revenue Guidance Raised; Mid-Term Plans Revised

By Tina Banerjee

  • PHC Holdings (6523 JP) has revised mid-term plan for FY23–26, targeting revenue of ¥420 billion in FY26, representing 5.4% CAGR. CGM will be one of the key growth engines.
  • During H1FY23, total revenue increased 3% y/y to ¥171 billion, mainly driven by a 3% growth in diabetes management business, which contributed 32% of total revenue.
  • In response to the recent depreciation of the Japanese yen, PHC has raised FY23 revenue guidance to ¥358 billion (+5% y/y) from ¥350 billion earlier.

Without Disclosure and Ensuring Transparency, the Black Box on Compensation Will Increase

By Aki Matsumoto

  • Progress on ESG initiatives should be evaluated objectively. With insufficient transparency and disclosure of compensation, there is concern that incorporating ESG factors into compensation will further increase uncertainty.
  • Leadership is required for management to seek the evolution of essential initiatives so that ESG efforts don’t fall into “numbers matching” and not be intimidated by temporary setbacks or modifications.
  • There are the following unresolved issues: non-disclosure of individual director compensation, bias toward fixed compensation, opaque compensation formulas, and ensuring the independence of the Compensation Committee.

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Nov 24
0

Daily Brief China: Alibaba (ADR), Meituan, DPC Dash, Kuaishou Technology, Geely Auto, Sunshine Insurance, Growatt Technology, China Dongxiang Group Co and more

By | China, Daily Briefs

In today’s briefing:

  • Alibaba (BABA US): Fighting Back
  • Add Meituan on Rumors of Social Benefit Payments
  • DPC Dash Pre-IPO – The Negatives – Lags the Leader, Remains Loss Making
  • Kuaishou: Domestic Business Turns Profitable for the First Time
  • Geely – ’22 Target Miss Already in Expectations, Catalysts for ’23
  • Sunshine Insurance Group Pre-IPO – PHIP Updates – Mixed Bag
  • Growatt Technology IPO: Growing Watts
  • China Dongxiang (3818 HK): Losses Narrowing Down, a Good Sign

Alibaba (BABA US): Fighting Back

By Steven Holden

  • Ownership in Alibaba Group Holdings is on the rise among active Greater China managers. 
  • Stock price below $100 a catalyst for active Greater China managers to buy back in, with Invesco, JP Morgan and E Fund among those opening positions
  • Alibaba remains well behind both TSMC and Tencent on an average weight basis and is the 2nd largest underweight in the Greater China region.

Add Meituan on Rumors of Social Benefit Payments

By Xin Yu, CFA

  • Meituan’s recent price decline was partly due to the rumors about the social benefit payments.
  • First, rumors are unverified statements. There was no such meeting at all.
  • Second, the social benefit payment impact is probably controllable. I think the recent price decline provides a chance of adding on the stock. 

DPC Dash Pre-IPO – The Negatives – Lags the Leader, Remains Loss Making

By Sumeet Singh

  • DPC Dash aims to raise around US$100m in its Hong Kong IPO. 
  • The company is the exclusive master franchisee for Domino’s Pizza in China, HK and Macau. DPC operated 562 stores across 13 cities, as of Nov 2022.
  • In this note, we will talk about the not-so-positive aspects of the deal.

Kuaishou: Domestic Business Turns Profitable for the First Time

By Shifara Samsudeen, ACMA, CGMA

  • Kuaishou Technology (1024 HK) reported 3Q2022 results. Revenue grew 12.9% YoY to RMB23.1bn (vs consensus RMB22.6bn) while reported operating losses declined to RMB2.6bn (vs consensus RMB3.1bn) from RMB3.1bn in 3Q2021.
  • The company’s domestic business made an operating profit for the first time while there has been significant reduction in operating losses from the overseas business
  • Kuaishou’s share price moved up 7% during today’s trade following its earnings announcement and we think there is further upside to the company’s current share price.

Geely – ’22 Target Miss Already in Expectations, Catalysts for ’23

By Victoria Li

  • Sector headwinds including supply chain shortage and business interruptions from Covid lockdown is easing.
  • More new models in pipeline to drive sales volumes and earnings in 2023E
  • Valuation re-rating would be triggered with earning recovery, consensus estimate upgrades, Zeekr ramping up and potentially Zeekr spin off.

Sunshine Insurance Group Pre-IPO – PHIP Updates – Mixed Bag

By Sumeet Singh

  • Sunshine Insurance Group (SIG), a life, health and P&C insurance company, aims to raise up to US$1bn in its HK IPO.
  • SIG is an integrated insurance provider which offers both life and health (L&H) and property and casualty (P&C) insurance in China.
  • We have looked at the company’s past performance in our previous notes. In this note, we will talk about the updates from its latest filings.

Growatt Technology IPO: Growing Watts

By Arun George

China Dongxiang (3818 HK): Losses Narrowing Down, a Good Sign

By Osbert Tang, CFA

  • Lower losses for investment business and sportswear retailing have contributed to a 48.4% reduction in losses for 1H FY23 at China Dongxiang Group Co (3818 HK).
  • The resumption of interim special dividend is a welcoming sign. Inventory clearance, store optimisation, cost reduction and growth at the PHENIX ski wear brands are positive drivers.
  • Its market capitalisation of HK$1.88bn represents a steep discount of 79% to its cash and investment portfolio of Rmb8.46bn, and this also means sportswear business is free.

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Nov 23
0

Daily Brief ESG: Should the 2022 Annual Meeting of Shareholders Be Regarded as Constant Progress? and more

By | Daily Briefs, ESG

In today’s briefing:

  • Should the 2022 Annual Meeting of Shareholders Be Regarded as Constant Progress?

Should the 2022 Annual Meeting of Shareholders Be Regarded as Constant Progress?

By Aki Matsumoto

  • Early disclosure of convocation notices and the use of electronic voting platforms, as specified in Corporate Governance Code, and electronic voting, which reduces the companies’ administrative burden, have also progressed.
  • Although the provision of English-language convocation notices was included in the Corporate Governance Code, only a few companies still send all documents in English translation.
  • More than 10 years after the regulatory-changes, few companies still file their annual securities reports prior to AGMs. Few companies take such a proactive approach by changing their company workflow.

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Nov 23
0

Daily Brief Credit: Morning Views Asia: Vedanta Resources and more

By | Credit, Daily Briefs

In today’s briefing:

  • Morning Views Asia: Vedanta Resources

Morning Views Asia: Vedanta Resources

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 23
0

Daily Brief ECM: Skymark Airlines Pre-IPO – Highly Leveraged with a History of Bankruptcy and more

By | Daily Briefs, ECM

In today’s briefing:

  • Skymark Airlines Pre-IPO – Highly Leveraged with a History of Bankruptcy
  • 2023 High Conviction: Chindata’s Track Record & Rating Makes It a Takeover Target
  • DPC Dash Pre-IPO – The Positives – On a Rapid Expansion Spree

Skymark Airlines Pre-IPO – Highly Leveraged with a History of Bankruptcy

By Ethan Aw

  • Skymark Airlines (9204 JP) is looking to raise approximately US$218m in its upcoming Japan IPO.  
  • Skymark Airlines (SA) is a Japanese low-cost airline, being the third largest domestic airline  according to the company. Unlike major airlines and other low-cost carriers, Skymark operates only domestic flights.
  • In this note, we talk about the company’s past performance.

2023 High Conviction: Chindata’s Track Record & Rating Makes It a Takeover Target

By Arun George

  • Chindata Group (CD US)’s 3Q22 results beat both revenue and adjusted EBITDA consensus estimates. Chindata raised its full-year guidance for the second time this year.
  • Chindata continues to attract rumours of takeover interest, most recently from China Merchants. Its track record of beating guidance, modest leverage and beaten-down rating make it a target. 
  • A forward EV/EBITDA multiple of 10.8x, in line with 21Vianet Group (VNET US)’s multiple implied by its founder’s offer (at US$8.20), would imply Chindata’s price of US$8 per ADS.  

DPC Dash Pre-IPO – The Positives – On a Rapid Expansion Spree

By Sumeet Singh

  • DPC Dash aims to raise around US$100m in its Hong Kong IPO. 
  • The company is the exclusive master franchisee for Domino’s Pizza in China, HK and Macau. DPC operated 562 stores across 13 cities, as of Nov 2022.
  • In this note, we will talk about the positive aspects of the deal.

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Nov 23
0

Daily Brief Quantitative Analysis: Creating a CTA from Scratch- II and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • Creating a CTA from Scratch- II

Creating a CTA from Scratch- II

By Nicolas Rabener

  • CTAs pursue trends across asset classes, regardless if long or short
  • 2022 is exceptional as CTAs have more short positions than during the GFC
  • No single long bond index position remains, fixed income is one big short

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Nov 23
0

Daily Brief Thematic (Sector/Industry): UK Energy: Investors Split as Tentative Rotation Begins and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • UK Energy: Investors Split as Tentative Rotation Begins

UK Energy: Investors Split as Tentative Rotation Begins

By Steven Holden

  • UK Energy is still under-owned.  22.1% of UK managers have zero exposure and 67.4% are positioned underweight.
  • Signs of a rotation are under way, driven by Value and Yield funds and mainly in Shell PLC and BP PLC.  
  • Missing from the picture is the return of Growth and Aggressive Growth managers, who remain lightly positioned and clearly unconvinced by the investment case at present. 

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