Smartkarma Daily Briefs

Bumble delivered a mixed set of third-quarter results as it failed to meet market expectations on the revenue front but managed an earnings beat.
The company produced a decent top-line growth of 17% year over year in Q3, driven by 28% growth for the Bumble App.
The revenue growth would have been 10 points higher and Bumble App revenue growth would have been 5 points higher after adjusting for forex and the situation in Ukraine.

Ralph Lauren: Collaboration With Fortnite & Other Developments

Ralph Lauren’s previous quarter results were strong and the company managed an all-around beat.
Their top-line continued to increase in the previous quarter, with revenues rising 13% in constant currency and 5% on a reported basis.
The success for this quarter was once again aided by good constant currency growth across all 3 regions.

Tapestry Inc: Major Drivers

Despite the challenging environment, Tapestry’s first quarter results were strong and the company’s performance exceeded market expectations in terms of revenues as well as earnings.
This result highlights the company’s transformation into a customer-centric and data-driven organization, which have helped it effectively navigate the challenging climate.
Their direct-to-consumer operations grew again in this quarter thanks to the strong management focus on building omnichannel experiences.

Tyson Foods: Major Drivers

Tyson Foods’ stock has been on a downward trajectory for a while and the recent results did not help the situation.
Consumer demand for protein is largely stable in this difficult macroeconomic context with record-high inflation.
Volume performance increased in the fourth quarter because of their investments in brands and merchandising, which raised portfolio market share.

Walmart Inc: The Walmart Creator Platform & Other Drivers

Walmart’s stock has climbed to a new high after the company delivered strong results and surpassed Wall Street expectations in terms of revenues as well as earnings.
In Q3, strong sales were achieved in each of its segments and its U.S. comparable sales increased sequentially by 8.2% thanks to higher average ticket sizes and more transactions.
Walmart International experienced strong constant currency sales growth of 13.3%, driven primarily by Flipkart and Walmex, while Sam’s Club USA posted double-digit comps growth of 10.3%, excluding fuel and tobacco, for the 11th consecutive quarter.

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Nov 19

Daily Brief Australia: OZ Minerals Ltd and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

OZ Minerals (OZL AU)’s A$28.25 Non-Binding Offer from BHP

OZ Minerals (OZL AU)’s A$28.25 Non-Binding Offer from BHP

OZ Minerals Ltd (OZL AU) has received a revised non-binding indicative offer from BHP Group Ltd (BHP AU) at A$28.25 per share, a 13.0% premium to the previously rejected offer.
The Board has granted four weeks of due diligence and intends to recommend a binding offer at A$28.25 per share, in the absence of a superior proposal.
While the offer is below the rumoured Board’s target of a A$30 offer, it is still attractive. At the last close, the gross spread to the offer is 3.3%.

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Nov 19

Daily Brief Japan: Takeda Pharmaceutical and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Takeda Pharma ADR: Initiation of Coverage – Recent Drug Updates & Key Drivers

Takeda Pharma ADR: Initiation of Coverage – Recent Drug Updates & Key Drivers

This is our first report on Japanese pharma major, Takeda Pharma.
A significant pipeline milestone was achieved by the company when TAK-003, the dengue vaccine candidate of the company, received approval.
Dr.

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Nov 19

Daily Brief China: Alibaba Group, Tencent, Weimob Inc., Lifestyle International Holdings, Alibaba (ADR), Lygend Resources & Technology, Midea Group Co Ltd A, Wuxi Biologics and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

Alibaba – OP Beat Driven By Cost Cutting Masks Dissapointments Everywhere Else
Tencent/Netease: Breakthrough in November Batch of Game Approval
Weimob (2013 HK): Strategic Patience Will Be Rewarded
Lifestyle International (1212 HK)’s Wide Spread Heading into the 21 November Vote
EQD | Alibaba (BABA US): Use Elevated Upside to Buy Call Ratios into Year-End
Lygend Resources & Technology IPO: Riding the Wave
Shanghai/Shenzhen Northbound Connect: Weekly Moves (18 November 2022)
Shanghai/Shenzhen Southbound Connect: Weekly Moves (18 November 2022)

Alibaba – OP Beat Driven By Cost Cutting Masks Dissapointments Everywhere Else

By Oshadhi Kumarasiri

Alibaba Group (9988 HK) bounced 7.8% yesterday following an OP beat of 24.4% through cost-controls but overall results were quite disappointing with revenue falling a touch below consensus at RMB 207.2bn.
Alibaba’s cash cows are growing no more, Thus, the company is focusing on ways to improve its profitability.
Meanwhile, the other growth avenues that Alibaba was proudly speaking of have pretty much disappeared with the company forced to cut down investments in these growing businesses.

Tencent/Netease: Breakthrough in November Batch of Game Approval

By Ke Yan, CFA, FRM

China just announced game approval for November batch after one month break. The number of games approved is inline with the previous three months.
Pace of China game approval stays flattish, at a much slower pace than pre-tightening.
Both Tencent and Netease received approval for one game. It is more symbolic than financially material. Sentiments are turning slightly but it is not out of the wood yet.

Weimob (2013 HK): Strategic Patience Will Be Rewarded

By Eric Chen

Weimob’s share price more than doubled in a month on encouraging 3Q preliminary data and improved sentiment towards China assets
We explore socio-economic factors resulting in the slow ramp up of China SaaS sector , size Weimob’s TAM by drawing insights from Alibaba and determine its valuation in two-piece report
In the first part, we argue that inadequate cost or efficiency competitiveness of SaaS solutions over existing labor-based or manual processes have been a key drag

Lifestyle International (1212 HK)’s Wide Spread Heading into the 21 November Vote

Lifestyle International Holdings (1212 HK)’s vote on Mr Lau’s offer of HK$5.00 per share is at 10 am on Monday, 21 November. The wide spread of 6.6% reflects vote risk.
Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection). No shareholder holds a blocking stake.
Ongoing weak Hong Kong retail sales and peers’ slightly de-rating should lower the vote risk. Headcount test not applicable. While light, we continue to expect the offer to succeed.

EQD | Alibaba (BABA US): Use Elevated Upside to Buy Call Ratios into Year-End

By Simon Harris

Alibaba unveiled an upsized buyback plan this week and stock rallied despite a revenue miss
Sentiment in China is changing with tweaks to the Covid strategy and improving economic outlook
Call buying has elevated upside vols providing trading opportunites for both directional and volatility traders

Lygend Resources & Technology IPO: Riding the Wave

Lygend Resources & Technology (LR HK), a nickel play, is set to open its books for an HKEx IPO to raise US$700-800 million, according to press reports.
Lygend had the largest nickel ore trading volume in China in 2019, 2020 and 2021, with a market share of 26.8% in 2021.
The fundamentals are solid as the consolidation of HPL has delivered strong growth and an improved margin profile, at manageable leverage.

Shanghai/Shenzhen Northbound Connect: Weekly Moves (18 November 2022)

By David Blennerhassett

Inside is a recap of movements in the last week relating to the Hong Kong Stock Exchange -Shanghai and Shenzhen Northbound Connect facilities, broken down by company and industry.
Overall, net inflow over the past week was ~US$5.7bn, split between Shanghai (+US$2.98bn) and Shenzhen (+US$2.8bn).
The largest inflows were into Kweichow Moutai (600519 CH) and Midea Group (000333 CH). The largest outflows were in NARI Technology (600406 CH) and China Yangtze Power (600900 CH).

Shanghai/Shenzhen Southbound Connect: Weekly Moves (18 November 2022)

By David Blennerhassett

Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
Overall, the net outflow over the past week was ~HK$0.14bn, split (-HK$0.47bn) for Shanghai and (+HK$0.32bn) for Shenzhen.
The largest inflows were in Tencent (700 HK) and Hang Seng H Share (2828 HK). The largest outflows were inMeituan (3690 HK) and Tracker Fund of HK (2800 HK).

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Nov 19

Daily Brief India: Zomato, Bajaj Holdings and Investment, Five Star Business Finance, Archean Chemical Industries, Edelweiss Financial Services, RPSG Ventures Limited and more

By Smartkarma Daily Briefs | Daily Briefs, India

In today’s briefing:

2023 High Conviction: Zomato – Home Delivering Laziness
Bajaj Holdings (BJHI IN): Potential Index Inclusion Can Narrow Hold Co. Discount Further
Five-Star Business IPO Trading – One of the Best Anchor Books but Worst Overall Demand
Archean Chemical Industries IPO Trading – One of the Highest Subscriptions for the Year
Edelweiss: At An Inflection Point
RPSG Ventures: FMCG Business Is Scaling Up; VC Business Is Germinating to the Next-Level

2023 High Conviction: Zomato – Home Delivering Laziness

By Sumeet Singh

Zomato is one of the largest food delivery platforms in India. It was listed in Jul 21 and after initially doubling, its shares are now trading below its IPO price.
It has grown its food delivery GOV by 3.5x over FY19-22 and growth remains strong, while profitablity has been improving.
Its recent venture into quick commerce should allow for better fleet utilisation and hence, better longer term growth and profitability.

Bajaj Holdings (BJHI IN): Potential Index Inclusion Can Narrow Hold Co. Discount Further

By Devi Subhakesan

Bajaj Holdings and Investment (BJHI IN) is expected to be included in the MSCI India Index at the November SAIR (Read more about the index inclusion here: https://skr.ma/xhbPx)
Bajaj Holdings, a holding and investment company, with significant stakes in Bajaj Auto Ltd and Bajaj Finserv has historically traded at a steep discount to the market value of investments.
Its Holdco discount has narrowed to around 53% and has the potential to narrow further with greater ownership and visibility post the likely index inclusion.

Five-Star Business IPO Trading – One of the Best Anchor Books but Worst Overall Demand

By Sumeet Singh

Five Star Business Finance (0958461D IN) raised around US$190m in its India IPO.
Five-Star Business is a non-banking financial company (NBFC-ND-SI) that provides secured business loans to micro-entrepreneurs and self-employed individuals.
We have looked at various aspects of the deal in our previous note, in this note, we talk about the demand and trading dynamics.

Archean Chemical Industries IPO Trading – One of the Highest Subscriptions for the Year

By Ethan Aw

Archean Chemical Industries (0810406D IN) has raised about US$178m in its India IPO.
Archean Chemical Industries (ACI) is a specialty marine chemical manufacturer in India focused on producing and exporting bromine, industrial salt, and sulphate of potash to customers around the world.
We have looked at various aspects of the deal in our previous notes. In this note, we talk about the demand for the deal and the trading dynamics.

Edelweiss: At An Inflection Point

By Ankit Agrawal, CFA

Credit business has seen decent recovery with asset quality stabilization and down-sizing of the wholesale loan book. Retail book is growing via co-lending and other asset-light models.
Asset Management business is scaling up well and is poised to benefit significantly from operating leverage, particularly in the Alternatives business as the carry fee kicks in from FY24.
Insurance businesses continue to scale up well. Edelweiss is seeking strategic partners for both the insurance businesses to take advantage of the new IRDA regulations.

RPSG Ventures: FMCG Business Is Scaling Up; VC Business Is Germinating to the Next-Level

By Ankit Agrawal, CFA

Key highlight of RPSG Ventures’ (RPSGV) Q2FY23 results was the FMCG business which reported revenues of INR 125cr, suggesting an annualized run-rate of INR 500cr vs INR 430cr QoQ.
RPSGV is doing all the right things to scale up its FMCG business. Its Sports venture also holds lot of promise.
RPSGV’s Venture Capital (VC) Fund that focuses on investing in D2C startups made a lucrative exit in one of its investments which generated 7x MOIC in just 4 years.

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Nov 19

Most Read: China Shenhua Energy Co H, Li Auto, Brilliance China Automotive, Devsisters, Swire Pacific (B), OZ Minerals Ltd, Oriental Land, Lotte Chemical and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

HSCEI Index Rebalance Preview: Could Be A BIG One
HSI Index Rebalance Preview: Small Step or Giant Leap?
HSCI Index Rebalance and Stock Connect: Changes at the Margins
KOSDAQ150 Index Rebalance: 11 Changes with a Couple of Surprises
Swire B Vs A – It Bounced Before, It Can Bounce Again – A 19 Year Low On the Ratio In Sight
OZ Minerals (OZL AU): BHP Ups Offer by 13%; This Should Get Done
Nikkei 225 March 2023 Review Quiddity Leaderboard (Nov 2022)
OZ Minerals (OZL AU) And BHP Have a Deal – Investors Have an OTM Option on Copper
Lotte Chemical – Ready to Announce Rights Offering Close to 2 Trillion Won?
OZ Minerals (OZL AU)’s A$28.25 Non-Binding Offer from BHP

HSCEI Index Rebalance Preview: Could Be A BIG One

There could be up to 6 changes to the Hang Seng China Enterprises Index (HSCEI INDEX) at the December rebalance, mainly driven by the deletions.
If there are six changes to the index, estimated one-way turnover is 6.47% and will result in a one-way trade of HK$4,124m.
There is large short interest on quite a lot of stocks and will play an important role in the rebalance.

HSI Index Rebalance Preview: Small Step or Giant Leap?

Currently at 69 index members, we just could reach 80 constituents at the December rebalance. That would leave the index committee to plan the move to 100 constituents in 2023.
We list 10 potential inclusions to the index in December. One-way turnover is just under 4% and inclusions of all stocks will increase index market cap coverage significantly.
Shorts are more than 3% of free float on five of the potential inclusions and these stocks could see some short covering ahead of the announcement of the changes.

HSCI Index Rebalance and Stock Connect: Changes at the Margins

We see 3 potential adds for the HSCI in December. We also see 26 potential adds and 16 potential deletes for the index in March.
Following the March rebalance, we see 22 potential inclusions to Stock Connect while we expect 37 stocks to be removed from the link.
Some of the potential deletions/ Stock Connect drops have large Southbound holdings and some of these positions could be pared back over the next few months.

KOSDAQ150 Index Rebalance: 11 Changes with a Couple of Surprises

There are 11 inclusions and 11 exclusions for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the December rebalance to be implemented at the close on 8 December.
We had forecast most of the changes (10 adds and 9 deletes), so there are a few surprises. The inclusion of SillaJen Inc (215600 KS) is the biggest one.
The adds to the index become short sell eligible from the open of trading on 9 December while the deletions will not be short sell eligible from the same time.

Swire B Vs A – It Bounced Before, It Can Bounce Again – A 19 Year Low On the Ratio In Sight

By Travis Lundy

Swire Pacific has been buying back Swire Pacific (B) (87 HK) and Swire Pacific (A) (19 HK) shares since August. They are now 58+% done with their HK$4bn buyback program.
The buyback so far has been 50% B shares and 50% A shares. This still seems odd to me but they are doing what they are doing.
B/A ratio is near a 19-year low. The last time it dipped to 6% under its 3mo average, it bounced back in 4 weeks. Now 5% cheap to average.

OZ Minerals (OZL AU): BHP Ups Offer by 13%; This Should Get Done

BHP Group has made a revised conditional, non-binding and indicative proposal to acquire all shares in OZ Minerals Ltd (OZL AU) at A$28.25/share, 13% higher than its earlier offer.
The OZ Minerals Board has agreed to give BHP Group Ltd (BHP AU) exclusive due diligence access for 4 weeks and intends to unanimously recommend the revised proposal.
Barring a competing proposal, this is BHP Group‘s best and final price – expect the stock to trade close to A$28/share today.

Nikkei 225 March 2023 Review Quiddity Leaderboard (Nov 2022)

By Travis Lundy

Early predictions for the March 2023 Nikkei rebalance (TBA early Feb) are little changed. One way turnover would still be about 1.4%. I see 3 ADDs and 3 DELETEs.
The 3 ADDs should be Oriental Land (4661), Renesas Electronics (6723), and Japan Airlines (9201). The 3 DELETES Toho Zinc (5707), Toyobo (3101), and Nippon Light Metal (5703).
Oriental Land is the one to watch in March. The Sep 2023 rebalance and subsequent ones are smaller in size but more interesting in impact.

OZ Minerals (OZL AU) And BHP Have a Deal – Investors Have an OTM Option on Copper

By Travis Lundy

After nearly 3 months of no talks and movement, then a flurry of both, BHP Group Ltd (BHP AU) and OZ Minerals Ltd (OZL AU) have an agreed Revised Proposal.
OZ Minerals Board has agreed to support the Revised Proposal at A$28.25/share, a 13% bump, subject to due diligence provided on an exclusive basis for four weeks.
A fully-franked dividend or capital return will be allowed (Scheme price to be adjusted). This will probably trade tight. One owns a call option on copper for probably 3-4 months.

Lotte Chemical – Ready to Announce Rights Offering Close to 2 Trillion Won?

By Douglas Kim

Numerous local media mentioned today that Lotte Chemical (011170 KS) is getting ready to announce a major rights offering to acquire Iljin Materials.
The size of the rights offering has not been finalized but the range of the rights offering could be about 1 trillion won to 2 trillion won.
There are additional concerns about Lotte Chem funding additional capital into Lotte E&C, which could face more financial difficulties in the local construction sector.

OZ Minerals (OZL AU)’s A$28.25 Non-Binding Offer from BHP

OZ Minerals Ltd (OZL AU) has received a revised non-binding indicative offer from BHP Group Ltd (BHP AU) at A$28.25 per share, a 13.0% premium to the previously rejected offer.
The Board has granted four weeks of due diligence and intends to recommend a binding offer at A$28.25 per share, in the absence of a superior proposal.
While the offer is below the rumoured Board’s target of a A$30 offer, it is still attractive. At the last close, the gross spread to the offer is 3.3%.

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Nov 19

Daily Brief Industrials: Archean Chemical Industries, VinFast and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Archean Chemical Industries IPO Trading – One of the Highest Subscriptions for the Year
Initial Thoughts on the Vinfast IPO

Archean Chemical Industries IPO Trading – One of the Highest Subscriptions for the Year

By Ethan Aw

Archean Chemical Industries (0810406D IN) has raised about US$178m in its India IPO.
Archean Chemical Industries (ACI) is a specialty marine chemical manufacturer in India focused on producing and exporting bromine, industrial salt, and sulphate of potash to customers around the world.
We have looked at various aspects of the deal in our previous notes. In this note, we talk about the demand for the deal and the trading dynamics.

Initial Thoughts on the Vinfast IPO

By Douglas Kim

According to Bloomberg, VinFast is getting ready for an IPO in the US as soon as 1Q 2023.
Vinfast has secured approximately US$1.2 billion in incentives for its EV production facility in North Carolina which is expected to start production in 2024 (annual production of 150,000 vehicles).
Vinfast could raise more than US$1 billion in this IPO. If Vinfast is able to successfully complete this IPO, it would be one of the largest Asian IPOs in 2023.

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Nov 19

Daily Brief TMT/Internet: Tencent, Weimob Inc., Alibaba (ADR), Taiwan Stock Exchange Weighted Index, Taiwan Semiconductor (TSMC), Bumble and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Tencent/Netease: Breakthrough in November Batch of Game Approval
Weimob (2013 HK): Strategic Patience Will Be Rewarded
EQD | Alibaba (BABA US): Use Elevated Upside to Buy Call Ratios into Year-End
Bullish Reversals Continue: TAIEX, KOSPI, AEX, Hang Seng, CSI 300. Buy Cyclicals/Growth on Pullbacks
Taiwan Semiconductor: Initiation of Coverage – Geopolitical Challenges & Other Factors
Bumble Inc.: Blind Dating Offering & Other Drivers

Tencent/Netease: Breakthrough in November Batch of Game Approval

By Ke Yan, CFA, FRM

China just announced game approval for November batch after one month break. The number of games approved is inline with the previous three months.
Pace of China game approval stays flattish, at a much slower pace than pre-tightening.
Both Tencent and Netease received approval for one game. It is more symbolic than financially material. Sentiments are turning slightly but it is not out of the wood yet.

Weimob (2013 HK): Strategic Patience Will Be Rewarded

By Eric Chen

Weimob’s share price more than doubled in a month on encouraging 3Q preliminary data and improved sentiment towards China assets
We explore socio-economic factors resulting in the slow ramp up of China SaaS sector , size Weimob’s TAM by drawing insights from Alibaba and determine its valuation in two-piece report
In the first part, we argue that inadequate cost or efficiency competitiveness of SaaS solutions over existing labor-based or manual processes have been a key drag

EQD | Alibaba (BABA US): Use Elevated Upside to Buy Call Ratios into Year-End

By Simon Harris

Alibaba unveiled an upsized buyback plan this week and stock rallied despite a revenue miss
Sentiment in China is changing with tweaks to the Covid strategy and improving economic outlook
Call buying has elevated upside vols providing trading opportunites for both directional and volatility traders

Bullish Reversals Continue: TAIEX, KOSPI, AEX, Hang Seng, CSI 300. Buy Cyclicals/Growth on Pullbacks

By Joe Jasper

The bear market rally that we have discussed since our Sept. 29 Int’l Compass has managed to surpass our price targets, which were YTD downtrends on the ACWX-US and EFA-US.
As a result of these bullish reversals and breakdowns on the US dollar (DXY) and 10-year Treasury yield, we are upgrading our outlook to neutral.
Buy ideas on a pullback in: Consumer Discretionary, Energy, and Technology/Tech Services

Taiwan Semiconductor: Initiation of Coverage – Geopolitical Challenges & Other Factors

This is our first report on Taiwan Semiconductor, the world’s largest dedicated contract chip manufacturer.
The company delivered a mixed set of results for the past quarter with revenues below expectations as it continues to see softness in the consumer end-market category.
TSMC’s other end market categories, like data centers and the automotive industry, are currently stable and it did manage to deliver an earnings beat.

Bumble Inc.: Blind Dating Offering & Other Drivers