Smartkarma Daily Briefs

Asics reports Q1 results on 11 May – we expect a beat to consensus numbers
We are bullish on Asics for the long term market share opportunity in China and margin expansion driven by digital
The rather amazing tie-up with STEPN for NFTs highlights potential new ways to monetise Asics brand value

H&H (1112 HK): Near Term Gloom Not Bad Enough to Lead to Long Term Doom.

By Devi Subhakesan

Highly leveraged Balance sheet and a USD350 mn bridge loan that needs refinancing, amidst rising interest rates, have alarmed investors, thus driving Health And Happiness (H&H) (1112 HK) stock south.
With its core Baby nutrition segment sales declining and Adult, Pet nutrition still in ramp up phase, the going has been tough for H&H as operating margins weakened.
Even as its near term concerns seem daunting, long term prospects are good with a diversified premium-brand portfolio that can moderate long term risk to growth from declining birth rate.

Aisin – Low Margins But Volume Is Key

By Mio Kato

Aisin’s 4QFY22 was weak on margins with revenue of ¥1,049bn (+3.9% vs. consensus) and OP of ¥43bn (-33.4% vs. consensus).
Guidance had a similar tone with the company projecting ¥4,450bn in revenue (+2.4% vs. consensus) but OP of ¥190bn (-29.6% vs. consensus) which we think is too conservative.
While results were disappointing we expect volume growth to be the key catalyst next year and cheap valuations should support strong upside.

Dabur India – Misses Estimates; Near Term Remains Challenging

Headline performance: Dabur’s 4QFY22 consolidated revenue grew by 7.7% YoY to Rs25.2bn (our est. of Rs26.2bn). EBITDA grew by just 2.5% YoY to Rs4.5bn (our est. of Rs5.1bn).

Segmental performance for 4QFY22: Healthcare (33.6% of Domestic FMCG in 4QFY22) grew by 7.4% YoY (2- year CAGR: 14.9%).

4QFY22 margin: Gross margin was down 130bps YoY at 47.4% (-90bps QoQ; vs our est. 47.5%)

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Dabur – Weak HPC Show; Expect Resilient Margin in FY23

Revenue miss, weak HPC: Net revenue grew by 8% YoY (+25% in Q4FY21 and +8% in Q3FY22), a miss on our expectation of 10.6% growth.

A miss in margin; expect resilient margin in FY23: GM contracted by 130bps YoY (-35bps in Q4FY21 and -205bps in Q3FY22) to 47.4%.

mployee/other expenses grew by 4/14% YoY (17/17% in Q4FY21). A&P spends were down 3% YoY.

Marico Ltd. – Expect near Term Demand to Be Uncertain and Margins to Be Subdued

4QFY22 headline performance: MRCO’s 4QFY22 consolidated topline grew by 7.4% YoY to Rs21.6bn (our est. of Rs21.5bn).

4QFY22 margin performance: Gross margin improved to 44.5% (+30bps YoY and +80bps QoQ; vs our est. of 43.8%).

FY22 performance: Revenue, EBITDA and APAT grew by 18.2%, 6.4% and 5.9%, respectively.

MatsukiyoCocokara (3088) | Triple Booster of Merger Synergies, Domestic Recovery, & Tourism

Merger synergies such as integrated purchasing will result in higher gross margins. A more efficient cost structure and sales synergies will boost the bottom line
We expect consumption to normalize in Japan as people get used to “living with covid.” Higher foot traffic will drive a resumption of high margin cosmetics
Inbound travel should be partially normalized this year and we believe the market will quickly price this in once borders reopen. We see 21% upside

Tata Consumer Products Ltd. – Operating Performance In-Line

Headline performance: TCPL’s 4QFY22 consolidated revenue grew by 4.5% YoY to Rs31.8bn (vs our est. of Rs31.3bn).

Business performance: India Branded business was up 6% YoY in 4QFY22.

Consolidated 4QFY22 margin: Gross margin was up 540bps YoY at 44.6% (+90bps QoQ; vs est. of 43.7%)

TVS Motor Company – Margin Beat; Supportive Outlook; EV Strategy Gathers Pace

Srong results; margin beat driven by tight cost controls: TVS reported revenue of Rs55bn, which was below our estimate (-3%), due to flattish ASP QoQ.

Encouraging outlook on demand and profitability: TVS expects the demand momentum to hold reasonably well in the export markets.

Expect premium valuation to sustain on continued volume and earnings outperformance

Before it’s here, it’s on Smartkarma

May 09

China: Health And Happiness (H&H), JHBP (Genor), CanSino Biologics Inc, Central China Real Estate and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

H&H (1112 HK): Near Term Gloom Not Bad Enough to Lead to Long Term Doom.
Genor Biopharma (6998 HK): First Product Approved in China; Late-Stage Pipeline Entails Visibility
CanSino Biologics (688185.CH/6185.HK) -Difficulties in 2022 Cannot Mask Long-Term Investment Value
Morning Views Asia: Adani Green Energy, Azure Power Global Ltd, Central China Securities

H&H (1112 HK): Near Term Gloom Not Bad Enough to Lead to Long Term Doom.

By Devi Subhakesan

Highly leveraged Balance sheet and a USD350 mn bridge loan that needs refinancing, amidst rising interest rates, have alarmed investors, thus driving Health And Happiness (H&H) (1112 HK) stock south.
With its core Baby nutrition segment sales declining and Adult, Pet nutrition still in ramp up phase, the going has been tough for H&H as operating margins weakened.
Even as its near term concerns seem daunting, long term prospects are good with a diversified premium-brand portfolio that can moderate long term risk to growth from declining birth rate.

Genor Biopharma (6998 HK): First Product Approved in China; Late-Stage Pipeline Entails Visibility

By Tina Banerjee

JHBP (Genor) (6998 HK) received approval in China for its first commercial drug, GB242, a biosimilar to Remicade (infliximab). Approved indications have an addressable patient population of 10 million.
The company is also expected to obtain marketing approval for its drug candidate for the treatment of relapsed and refractory peripheral T-cell lymphoma (PTCL) in China this year.
In-Licensed GB491 (lerociclib) has entered in two phase 3 clinical trials for first and second-line treatments of breast cancer. NDA for GB491 is expected to be filed in 2023.

CanSino Biologics (688185.CH/6185.HK) -Difficulties in 2022 Cannot Mask Long-Term Investment Value

By Xinyao (Criss) Wang

We update our forecast on CanSino’s performance in 2022, which could be much lower than that in 2021 due to the concerns on commercialization outlook of COVID-19 vaccine and MCV2/MCV4.
However, due to strong R&D and technology platforms, the value of CanSino’s pipeline is higher and its products could become the ceiling of pricing power for other homogeneous competing products.
We still think CanSino has investment value in long term despite the headwinds in short term.The market value by May 6 of HK$18.1 billion (PE/TTM at 7.22) is also attractive.

Morning Views Asia: Adani Green Energy, Azure Power Global Ltd, Central China Securities

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.

Adani Green Energy
Azure Power Global Ltd
Central China Securities
China Hongqiao
Country Garden Holdings Co
Jingrui Holdings
Ronshine China Holdings
Times China

Before it’s here, it’s on Smartkarma

May 09

India: Mindtree Ltd, Jindal Steel & Power, Life Insurance Corp of India (LIC), Kotak Mahindra Bank, Marico Ltd, Tata Consumer Products, Central China Real Estate, TVS Motor , Cholamandalam Investment and Finance and more

By Smartkarma Daily Briefs | Daily Briefs, India

In today’s briefing:

Mindtree & L&T Infotech’s US$18bn Merger: Details and Index Implications
India: Preview of Stock Reclassification for Active Funds
ECM Weekly (9th May 22) – LIC, Campus, Rainbow, Delhivery, Shieldus, Yunkang, PAG, Keep, Air NZ
Dabur – Weak HPC Show; Expect Resilient Margin in FY23
Kotak Mahindra Bank – Accelerating on Growth Engines; Speed Bumps Ahead
Marico Ltd. – Expect near Term Demand to Be Uncertain and Margins to Be Subdued
Tata Consumer Products Ltd. – Operating Performance In-Line
Morning Views Asia: Adani Green Energy, Azure Power Global Ltd, Central China Securities
TVS Motor Company – Margin Beat; Supportive Outlook; EV Strategy Gathers Pace
HSIE Results Daily: Cholamandalam Investment and Finance Company

Mindtree & L&T Infotech’s US$18bn Merger: Details and Index Implications

The Larsen & Toubro Infotech (LTI IN) and Mindtree Ltd (MTCL IN) merger will create a company with revenue of US$3.5bn and a market cap of US$18bn.
The merger ratio is 73 shares of Larsen & Toubro Infotech for 100 shares of Mindtree. The merger is expected to complete in 9-12 months.
There are likely to be some inflows from MSCI and FTSE trackers but the big kicker will be inclusion in the NIFTY Index – but a (smallish) rally is needed.

India: Preview of Stock Reclassification for Active Funds

Two-Thirds of the way through the review period, we see 7 stocks migrating from MidCap to LargeCap, 8 stocks from LargeCap to MidCap, and 1 new listing added to LargeCap.
Post listing, Life Insurance Corp of India (LIC) (1248Z IN) should be added to the LargeCap segment while Delhivery (1058656D IN) should be added to the MidCap segment.
On average, stocks expected to migrate from Mid Cap to Large Cap have outperformed. Stocks expected to migrate from the Large Cap to Mid Cap segment have performed the worst.

ECM Weekly (9th May 22) – LIC, Campus, Rainbow, Delhivery, Shieldus, Yunkang, PAG, Keep, Air NZ

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 IPOs front, LIC’s anchor book wasn’t great while Delhivery finally launched its IPO and Hong Kong market saw its first launch in a while.
Placements remained few and far between with only Air New Zealand (AIR NZ) launching its shortfall bookbuild.

Dabur – Weak HPC Show; Expect Resilient Margin in FY23

Revenue miss, weak HPC: Net revenue grew by 8% YoY (+25% in Q4FY21 and +8% in Q3FY22), a miss on our expectation of 10.6% growth.

A miss in margin; expect resilient margin in FY23: GM contracted by 130bps YoY (-35bps in Q4FY21 and -205bps in Q3FY22) to 47.4%.

mployee/other expenses grew by 4/14% YoY (17/17% in Q4FY21). A&P spends were down 3% YoY.

Kotak Mahindra Bank – Accelerating on Growth Engines; Speed Bumps Ahead

Multiple tailwinds drive a strong quarter: KMB reported a strong set of earnings (NII growth of 18% YoY, RoA of 2.7%) on the back of reflating NIM (4.8% – best-in-class), strong loan growth, and negative credit costs (-0.5%) as asset quality continues to remain impressive (slippages at 1.2%; SMA II at 0.1%).

Growth vs. margins – watch out for trade-offs ahead: With its formidable leadership in cost of funds (3.2%), KMB, from here on, is fully geared to accelerate growth in its secured and unsecured book further, supporting its large floating rate book (~68%) in a rising interest rate scenario.

Subsidiary businesses continue to scale; maintain ADD: KMB’s subsidiaries continue to deliver a strong performance, contributing ~30% of the consolidated PAT on a steady basis.

Marico Ltd. – Expect near Term Demand to Be Uncertain and Margins to Be Subdued

4QFY22 headline performance: MRCO’s 4QFY22 consolidated topline grew by 7.4% YoY to Rs21.6bn (our est. of Rs21.5bn).

4QFY22 margin performance: Gross margin improved to 44.5% (+30bps YoY and +80bps QoQ; vs our est. of 43.8%).

FY22 performance: Revenue, EBITDA and APAT grew by 18.2%, 6.4% and 5.9%, respectively.

Tata Consumer Products Ltd. – Operating Performance In-Line

Headline performance: TCPL’s 4QFY22 consolidated revenue grew by 4.5% YoY to Rs31.8bn (vs our est. of Rs31.3bn).

Business performance: India Branded business was up 6% YoY in 4QFY22.

Consolidated 4QFY22 margin: Gross margin was up 540bps YoY at 44.6% (+90bps QoQ; vs est. of 43.7%)

Morning Views Asia: Adani Green Energy, Azure Power Global Ltd, Central China Securities

By Charles Macgregor

Adani Green Energy
Azure Power Global Ltd
Central China Securities
China Hongqiao
Country Garden Holdings Co
Jingrui Holdings
Ronshine China Holdings
Times China

TVS Motor Company – Margin Beat; Supportive Outlook; EV Strategy Gathers Pace

Srong results; margin beat driven by tight cost controls: TVS reported revenue of Rs55bn, which was below our estimate (-3%), due to flattish ASP QoQ.

Encouraging outlook on demand and profitability: TVS expects the demand momentum to hold reasonably well in the export markets.

Expect premium valuation to sustain on continued volume and earnings outperformance

HSIE Results Daily: Cholamandalam Investment and Finance Company

Steady P&L outcomes, increasing opex intensity: Chola reported stable NII growth (+10% YoY), in line with AUM growth, as NIMs remained steady at 8.1%.

Receding stress pool; normalised credit costs: The aggregate stress pool has nearly halved to 12%, from the Q1FY22 peak of 21%, driven largely by strong collections and recoveries.

New businesses to augment growth; build-out key monitorable

Before it’s here, it’s on Smartkarma

May 09

Most Read: Yamada Denki, Mindtree Ltd, SenseTime Group, CJ CGV Co Ltd, Jindal Steel & Power and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Yamada Denki – GINORMOUS Buyback To Dramatically Boost EPS and ROE
Mindtree & L&T Infotech’s US$18bn Merger: Details and Index Implications
Index Rebalance & ETF Flow Recap: KOSPI200, KQ150, CSI300, STAR50, SET50, China A50, HSCI, SenseTime
KOSPI 200 Rebalancing: Trade Short Covering Event for Deletions
India: Preview of Stock Reclassification for Active Funds

Yamada Denki – GINORMOUS Buyback To Dramatically Boost EPS and ROE

By Travis Lundy

Yamada Denki (9831 JP) reported earnings (Revs -7.6% (slight beat), OP -28.6% (slight miss), NP -2.4% (slight miss)), and slightly upbeat forecasts to Mar-2023 (Revs +4.6%, OP +12.5%, NP +2.9%)
They also announced an unchanged dividend at ¥18/share, and a VERY BIG BUYBACK. This is one of the largest, most aggressive, on-market buyback programs I have ever seen.
Previous buybacks have been duds. Yamada Denki is not playing around this time. This time it will be a buy.

Mindtree & L&T Infotech’s US$18bn Merger: Details and Index Implications

The Larsen & Toubro Infotech (LTI IN) and Mindtree Ltd (MTCL IN) merger will create a company with revenue of US$3.5bn and a market cap of US$18bn.
The merger ratio is 73 shares of Larsen & Toubro Infotech for 100 shares of Mindtree. The merger is expected to complete in 9-12 months.
There are likely to be some inflows from MSCI and FTSE trackers but the big kicker will be inclusion in the NIFTY Index – but a (smallish) rally is needed.

Index Rebalance & ETF Flow Recap: KOSPI200, KQ150, CSI300, STAR50, SET50, China A50, HSCI, SenseTime

The review cutoff for the FTSE All-World/All-Cap June QIR is 11 May. The changes to the MSCI indices for the May SAIR will be announced on 13 May Asia time.
The review period for the KOSPI2 INDEX, KOSDAQ 150 Index, Shanghai Shenzhen CSI 300 Index, STAR50 INDEX and the SENSEX INDEX ended last week and there are changes.
ETF inflows were larger than outflows for nearly all Asian markets. The largest inflows were in the Hang Seng H Share Index ETF (2828) and Vanguard Aust Shares Etf (VAS).

KOSPI 200 Rebalancing: Trade Short Covering Event for Deletions

By Sanghyun Park

Short-Selling is not possible after being deleted from the KOSPI 200. So, active short-covering for deletions is witnessed before and after the rebalancing implementation.
CJ CGV (079160 KS) stands out the most at this point. Its short interest is 4.10% of SO, and the short interest has increased the most over the past month.
The short-covering/price movement started to be observed from the end of the prior month. So, I’d consider building positions from the third week of this month.

India: Preview of Stock Reclassification for Active Funds

Two-Thirds of the way through the review period, we see 7 stocks migrating from MidCap to LargeCap, 8 stocks from LargeCap to MidCap, and 1 new listing added to LargeCap.
Post listing, Life Insurance Corp of India (LIC) (1248Z IN) should be added to the LargeCap segment while Delhivery (1058656D IN) should be added to the MidCap segment.
On average, stocks expected to migrate from Mid Cap to Large Cap have outperformed. Stocks expected to migrate from the Large Cap to Mid Cap segment have performed the worst.

Before it’s here, it’s on Smartkarma

May 09

Industrials: Alliance Aviation Services and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Merger Arb Mondays (9 May) – Alliance Aviation, Ramsay Health, Yashili, VNET, Sezzle, Link

Merger Arb Mondays (9 May) – Alliance Aviation, Ramsay Health, Yashili, VNET, Sezzle, Link

By Arun George

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore and the US (Chinese ADRs only).
This week, the highest gross spreads are Dongzheng Automotive Finance (2718 HK), Yashili International Holdings (1230 HK), 21Vianet Group (VNET US), Sezzle Inc (SZL AU), Alliance Aviation Services (AQZ AU).
The lowest gross spreads are Beijing Enterprises Urban Resources (3718 HK), Virtus Health (VRT AU), Uniti Group Ltd (UWL AU), China Logistics Property Holdings (1589 HK), Irongate Group (IAP AU).

Before it’s here, it’s on Smartkarma

May 09

Equity Bottom-Up: ASICS Corp, Health And Happiness (H&H), Tokyo Electron, JHBP (Genor), CanSino Biologics Inc, Aisin Seiki, UniCredit SpA, Hut 8 Mining, MatsukiyoCocokara and more

By Smartkarma Daily Briefs | Daily Briefs, Equity Bottom-Up

In today’s briefing:

Asics (7936) | Stepn into the Metaverse
H&H (1112 HK): Near Term Gloom Not Bad Enough to Lead to Long Term Doom.
Tokyo Electron (8035) | Fundamentals Don’t Matter…for Now
Genor Biopharma (6998 HK): First Product Approved in China; Late-Stage Pipeline Entails Visibility
CanSino Biologics (688185.CH/6185.HK) -Difficulties in 2022 Cannot Mask Long-Term Investment Value
Aisin – Low Margins But Volume Is Key
Unicredit (UCG IM) – Attractive on Capital Distribution Potential Despite Russia
Hut 8 Mining: North Bay Mining Site Will Add 100MW Capacity in Ontario
MatsukiyoCocokara (3088) | Triple Booster of Merger Synergies, Domestic Recovery, & Tourism

Asics (7936) | Stepn into the Metaverse

Asics reports Q1 results on 11 May – we expect a beat to consensus numbers
We are bullish on Asics for the long term market share opportunity in China and margin expansion driven by digital
The rather amazing tie-up with STEPN for NFTs highlights potential new ways to monetise Asics brand value

H&H (1112 HK): Near Term Gloom Not Bad Enough to Lead to Long Term Doom.

By Devi Subhakesan

Highly leveraged Balance sheet and a USD350 mn bridge loan that needs refinancing, amidst rising interest rates, have alarmed investors, thus driving Health And Happiness (H&H) (1112 HK) stock south.
With its core Baby nutrition segment sales declining and Adult, Pet nutrition still in ramp up phase, the going has been tough for H&H as operating margins weakened.
Even as its near term concerns seem daunting, long term prospects are good with a diversified premium-brand portfolio that can moderate long term risk to growth from declining birth rate.

Tokyo Electron (8035) | Fundamentals Don’t Matter…for Now

Tokyo Electron reports FY3/22 results on 12 May. We expect the company to meet guidance and analyst expectations
But the outlook may disappoint. Management may guide FY3/23 more conservatively than analysts who are looking for operating profit to grow 20% to ¥700 bn
Despite favorable industry conditions and strong outlook for WFE, we think that the stock could continue to de-rate

Genor Biopharma (6998 HK): First Product Approved in China; Late-Stage Pipeline Entails Visibility

By Tina Banerjee

JHBP (Genor) (6998 HK) received approval in China for its first commercial drug, GB242, a biosimilar to Remicade (infliximab). Approved indications have an addressable patient population of 10 million.
The company is also expected to obtain marketing approval for its drug candidate for the treatment of relapsed and refractory peripheral T-cell lymphoma (PTCL) in China this year.
In-Licensed GB491 (lerociclib) has entered in two phase 3 clinical trials for first and second-line treatments of breast cancer. NDA for GB491 is expected to be filed in 2023.

CanSino Biologics (688185.CH/6185.HK) -Difficulties in 2022 Cannot Mask Long-Term Investment Value

By Xinyao (Criss) Wang

We update our forecast on CanSino’s performance in 2022, which could be much lower than that in 2021 due to the concerns on commercialization outlook of COVID-19 vaccine and MCV2/MCV4.
However, due to strong R&D and technology platforms, the value of CanSino’s pipeline is higher and its products could become the ceiling of pricing power for other homogeneous competing products.
We still think CanSino has investment value in long term despite the headwinds in short term.The market value by May 6 of HK$18.1 billion (PE/TTM at 7.22) is also attractive.

Aisin – Low Margins But Volume Is Key

By Mio Kato

Aisin’s 4QFY22 was weak on margins with revenue of ¥1,049bn (+3.9% vs. consensus) and OP of ¥43bn (-33.4% vs. consensus).
Guidance had a similar tone with the company projecting ¥4,450bn in revenue (+2.4% vs. consensus) but OP of ¥190bn (-29.6% vs. consensus) which we think is too conservative.
While results were disappointing we expect volume growth to be the key catalyst next year and cheap valuations should support strong upside.

Unicredit (UCG IM) – Attractive on Capital Distribution Potential Despite Russia

By Victor Galliano

Unicredit, with its solid capital adequacy and improved credit quality metrics, is well positioned to deliver on capital distribution, despite the Russian challenges
We estimate that, even on a relatively conservative basis, capital distribution yield could reach 12% in 2022 and also be at the top end of the peer group post-2022
Unicredit has often been in the shadow of Intesa in capital distribution, but we believe that consensus estimates are currently under-estimating the potential for dividends and share buy-backs at Unicredit

Hut 8 Mining: North Bay Mining Site Will Add 100MW Capacity in Ontario

By Andrei Zakharov

Hut 8 Mining (HUT US) is a cryptocurrency mining company headquartered in Toronto, Canada. Crypto miner has two facilities in operation: Drumheller and Medicine Hat in Alberta.
In 2017, Hut 8 Mining established a partnership with Bitfury Group to acquire, install, maintain and operate Bitcoin mining data centers in North America.
We like the company’s solid balance sheet with 6,769 BTC held as of Apr-22, the opportunity to add an extra 100MW capacity in North Bay and the acquisition of TeraGo.

MatsukiyoCocokara (3088) | Triple Booster of Merger Synergies, Domestic Recovery, & Tourism

Merger synergies such as integrated purchasing will result in higher gross margins. A more efficient cost structure and sales synergies will boost the bottom line
We expect consumption to normalize in Japan as people get used to “living with covid.” Higher foot traffic will drive a resumption of high margin cosmetics
Inbound travel should be partially normalized this year and we believe the market will quickly price this in once borders reopen. We see 21% upside

Before it’s here, it’s on Smartkarma

May 08

India: Delhivery and more

By Smartkarma Daily Briefs | Daily Briefs, India

In today’s briefing:

Delhivery IPO: Valuation Insights

Delhivery IPO: Valuation Insights

By Arun George

Delhivery (1058656D IN) is the largest and fastest-growing 3PL express parcel delivery player in India. It will launch its Rs52.4 billion ($0.7 billion) IPO on 11 May.
In Delhivery IPO: Yet to Convincingly Deliver, we noted that the negatives outweigh the positives.
In this note, we look at the valuation metrics. We think that Delhivery is at best fairly valued at the IPO price range.

Before it’s here, it’s on Smartkarma

May 08

Japan: Misumi Group, Hitachi Transport System and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Misumi Group (9962 JP): Watch Out for Recession
Asia-Pac Weekly Risk Arb Wrap: Alliance Aviation, AGL, Virtus, Yashili, Hitachi Transport

Misumi Group (9962 JP): Watch Out for Recession

By Scott Foster

The shares look cheap on FY Mar-23 guidance, but operating profit has dropped back after a surge and 1H looks difficult.
On the positive side, the VONA e-commerce business is catching up with Factory Automation as a source of profit. Annual sales and profitability have reached new highs.
Management has rebalanced the business. The main risk now is macro-economic.

Asia-Pac Weekly Risk Arb Wrap: Alliance Aviation, AGL, Virtus, Yashili, Hitachi Transport

By David Blennerhassett

There are 37 – mostly firm – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
One new deal this week: Qantas Airways (QAN AU) has entered into a Scheme to buy smaller airline Alliance Aviation Services (AQZ AU).
Key updates took place for: AGL Energy Ltd (AGL AU), Virtus Health (VRT AU), Suchuang Gas Corp (1430 HK), Yashili International Holdings (1230 HK) & Hitachi Transport System (9086 JP).

Before it’s here, it’s on Smartkarma

May 08

Health Care: Yunkang Group and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Yunkang Group IPO – Futile to Try and Gauge Its Post-COVID Performance

Yunkang Group IPO – Futile to Try and Gauge Its Post-COVID Performance

By Clarence Chu

Yunkang Group (2325 HK) is looking to raise US$139m in its Hong Kong IPO.
Yunkang Group has grown its on-site diagnostics centers and has grand plans to add new centers with the IPO proceeds.
However, its business performance had been largely impacted by COVID, where COVID-related tests amounted to 83.6% of total tests performed in FY21, while contributing 58.1% to total revenue.

Before it’s here, it’s on Smartkarma

May 08

Most Read: Yamada Denki, China MeiDong Auto, Delhivery, Yashili International Holdings, SenseTime Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Yamada Denki – GINORMOUS Buyback To Dramatically Boost EPS and ROE
China Meidong: Back the Porsche at 20 HKD
Delhivery IPO: Offering Details & Index Inclusion Timeline
Yashili (1230 HK)’s Pre-Conditional Offer From Mengniu
Index Rebalance & ETF Flow Recap: KOSPI200, KQ150, CSI300, STAR50, SET50, China A50, HSCI, SenseTime

Yamada Denki – GINORMOUS Buyback To Dramatically Boost EPS and ROE

By Travis Lundy

Yamada Denki (9831 JP) reported earnings (Revs -7.6% (slight beat), OP -28.6% (slight miss), NP -2.4% (slight miss)), and slightly upbeat forecasts to Mar-2023 (Revs +4.6%, OP +12.5%, NP +2.9%)
They also announced an unchanged dividend at ¥18/share, and a VERY BIG BUYBACK. This is one of the largest, most aggressive, on-market buyback programs I have ever seen.
Previous buybacks have been duds. Yamada Denki is not playing around this time. This time it will be a buy.

China Meidong: Back the Porsche at 20 HKD

By Sameer Taneja

China Meidong Auto (1268 HK) trades at a 12x/9x PE FY22/23E with a 6.5% dividend yield at a 20 HKD/share price (assuming an 80% payout ratio).
In buying China Meidong Auto (1268 HK), you get an industry leader in the dealership space with supreme execution (35% ROE/47% CAGR profit growth/best capital allocator).
The integration of the Starchase Porsche Dealerships provides an upside potential, as the management, with their superior track record, can significantly improve the target’s operations.

Delhivery IPO: Offering Details & Index Inclusion Timeline

Delhivery (1058656D IN) is looking at raising INR 52,350m (US$685m) in its IPO by selling up to 113.3m shares at a range of INR 462-487/share.
At the mid point of the IPO range, Delhivery (1058656D IN) will be valued at INR 344.8bn (US$4.5bn) while the free float market cap will be much lower.
Delhivery (1058656D IN) could get entry to the FTSE All-World Index at the December QIR, while inclusion in the MSCI India Index could take place at the May 2023 SAIR.

Yashili (1230 HK)’s Pre-Conditional Offer From Mengniu

By David Blennerhassett

Yashili International Holdings (1230 HK) has announced a pre-conditional Offer, by way of a Scheme, from China Mengniu Dairy Co (2319 HK).
The cancellation price of HK$1.20/share, a 31.9% premium to last close, and a 161% premium to the undisturbed price, is in line with the 16 March announcement.
Conditions involve various business disposals and the exit of Danone SA (BN FP)‘s stake in Yashili; yet apart from timing, which is contingent on regulatory approvals, this looks done.

Index Rebalance & ETF Flow Recap: KOSPI200, KQ150, CSI300, STAR50, SET50, China A50, HSCI, SenseTime

The review cutoff for the FTSE All-World/All-Cap June QIR is 11 May. The changes to the MSCI indices for the May SAIR will be announced on 13 May Asia time.
The review period for the KOSPI2 INDEX, KOSDAQ 150 Index, Shanghai Shenzhen CSI 300 Index, STAR50 INDEX and the SENSEX INDEX ended last week and there are changes.
ETF inflows were larger than outflows for nearly all Asian markets. The largest inflows were in the Hang Seng H Share Index ETF (2828) and Vanguard Aust Shares Etf (VAS).

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