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Smartkarma Daily Briefs

Nov 09
0

Daily Brief Consumer: Jardine Cycle & Carriage, LG Energy Solution, FSN E-Commerce Ventures (Nykaa), Calbee Inc, Sapporo Holdings, Dohome PCL, Colgate Palmolive Co and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Jardine C&C (JCNC SP): Potential MSCI Inclusion as NAV Discount Shrinks
  • TIGER Top 10 Rebalancing: A Big Change Awaits
  • FSN E-Commerce (Nykaa) Lockup Expiry – US$2.5bn Unlock with a Very Scattered Shareholding
  • Calbee – Price Hikes to Deliver Upside As Buybacks Provide Downside Protection
  • The First Step in Major Shift in Management Strategy Is for Sapporo to Sell Its Cross-Shareholdings
  • DOHOME : Weak 3Q22 Earnings as Expected
  • Colgate-Palmolive Co: Major Drivers

Jardine C&C (JCNC SP): Potential MSCI Inclusion as NAV Discount Shrinks

By Brian Freitas

  • Jardine Cycle & Carriage (JCNC SP) was deleted from the SIMSCI Index in November 2020 and could be added back to the index at the upcoming SAIR.
  • If added to the index, we estimate passive MSCI trackers will need to buy 7.9m shares (US$176m; 11 days of ADV) at the close on 30 November.
  • Jardine Cycle & Carriage (JCNC SP) is trading at a tight discount to its listed holdings and the spread could widen post the MSCI implementation.

TIGER Top 10 Rebalancing: A Big Change Awaits

By Sanghyun Park

  • The two names in LONG (LG Energy Solution and Celltrion) and the two names in SHORT (Shinhan Financial and KB Financial) are almost a foregone conclusion.
  • POSCO Holdings is now ahead of Kakao Corp due to the recent sharp rise in its share price. But the gap between them is still quite tight.
  • This rebalancing will likely aggravate LG Energy’s flow crunch as it also awaits an MSCI up-weight (2x ADTV) in end-November and a KOSPI 200 up-weight (2x ADTV) on December 8.

FSN E-Commerce (Nykaa) Lockup Expiry – US$2.5bn Unlock with a Very Scattered Shareholding

By Sumeet Singh

  • In Nov 2021, Nykaa raised around US$720m in its India IPO, via mostly selling secondary shares.
  • Nykaa is a lifestyle focussed e-commerce platform and consumer brand offering a portfolio of beauty, personal care and fashion products, including its own branded products.
  • In this note, we will talk about the upcoming lockup expiry.

Calbee – Price Hikes to Deliver Upside As Buybacks Provide Downside Protection

By Oshadhi Kumarasiri

  • Calbee Inc (2229 JP)’s share price fell 4% today from the top end of the trend channel as 2QFY23 OP fell short of consensus by ¥658m to ¥4.9bn.
  • There was also a ¥3.5bn downgrade to full-year OP guidance on higher-than-expected energy and raw material costs. However, this seems too conservative, especially with 10-20% price hikes in September-November.
  • In addition, share buy-backs are starting to become a regular part of shareholder returns with ¥12.0bn per-year in share buybacks in the previous fiscal year and the current fiscal year.

The First Step in Major Shift in Management Strategy Is for Sapporo to Sell Its Cross-Shareholdings

By Aki Matsumoto

  • It is doubtful that independent outside directors are actually able to actively bridge the gap between shareholders and the board of directors, as the Corporate Governance Code states in Japan.
  • Behind the lack of willingness on the executive team to make major changes in the way things have been done is high % of specified shareholders (40%), including cross-held shares.
  • No major change in business strategy is expected unless foreign shareholder ratio exceeds 30%. In order for the current large shareholders’ equity to decline, Sapporo should sell its cross-held shares.

DOHOME : Weak 3Q22 Earnings as Expected

By Pi Research

  • Maintain HOLD recommendation for DOHOME with a target price of Bt14.10. DOHOME’s 3Q22 net profit came in at Bt50m (-85%YoY,-84%QoQ),in-line with our forecast but below BB consensus estimated by 34%
  • 3Q22 earnings sink both YoY and QoQ Its net profit came out at Bt50m (-85%YoY, -84%QoQ),the lowest level since listed.The 9M22 result accounted for 88%of full-year net profit in 2022.
  • The significant drop in 3Q22 earnings pressured by lower margin from steel products, clearance sales in decoration materials category, and rising all products cost as a result from rising inflation.

Colgate-Palmolive Co: Major Drivers

By Baptista Research

  • Colgate-Palmolive delivered a disappointing set of results in the relatively unstable operating environment and failed to meet revenue expectations of the market despite producing a high single-digit organic sales growth in the third quarter, with expansion in every division.
  • The company also saw an increase in all four categories, with high single-digit growth in personal care, pet nutrition, and oral care.
  • Another capability they are expanding across the firm is revenue growth management (RGM) with their data and analytics team strategizing on the same.

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Nov 08
0

Daily Brief Singapore: AEM and more

By | Daily Briefs, Singapore

In today’s briefing:

  • AEM: Another Solid Earnings Report, but Mr. Market Remains Worried on Outlook

AEM: Another Solid Earnings Report, but Mr. Market Remains Worried on Outlook

By Nicolas Van Broekhoven

  • AEM reported its best PBT 3Q and 9M22 results ever, yet investors remain skeptical of its FY23 outlook
  • Management reiterated guidance and provided a bullish statement about the coming years
  • AEM EPS likely to reach at least 0.42 SGD leaving the stock trading at only 7.8x P/E FY22 

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Nov 08
0

Daily Brief United States: GrafTech International Ltd, FTX Token, Copper, GMX, Ubiquiti Inc., Apple, Ethereum, Mastercard, Sap Se Sponsored Adr, T Mobile Us Inc and more

By | Daily Briefs, United States

In today’s briefing:

  • Graftech: Operational Issues Plague Thesis
  • FTT/FTX- Another Inflection Point in the Crypto Market Waiting to Happen?
  • Copper Long Needs USD to Break Lower
  • GMX – A DeFi Real Yield Protocol
  • UI: On Pace for Record Revenue
  • Apple Inc.: Latest Updates
  • FTT Liquidity Faces Key Test
  • Mastercard Inc.: The Crypto Source Program & Other Drivers
  • SAP SE ADR: Initiation of Coverage – Financial Forecasts
  • T-Mobile: Industry Specific Smart Solutions & Other Drivers

Graftech: Operational Issues Plague Thesis

By Sameer Taneja

  • GrafTech International Ltd (EAF US) thesis has taken a turn for the worse with the suspension of the operations in Mexico (impact 50% of production in Q4 2022/H1 2023). 
  • The negotiations of LTA pricing ( based on spot pricing ) in the near term also prove to be a headwind, with spot prices 40% below the contract. 
  • At 7.3x PE FY23 (earnings down 60% YoY), the stock price reflects these challenges. The recovery for the company to normalized cash flow levels will take much longer.

FTT/FTX- Another Inflection Point in the Crypto Market Waiting to Happen?

By Rose Choy

  • On Nov 3, it was leaked that Alameda seemed to have a weaker than expected balance sheet with $7.6 bn of loans and a relatively illiquid portfolio of assets.
  • Alameda, a large proprietary crypto trading firm, did not officially comment but its CEO Caroline stated on Twitter that most of the loans were repaid. 
  • The potential linkages between Alameda and FTX, a large crytpo exchange, both controlled by Sam Bankman-Fried, are of utmost concern and has riled the crytpo market.

Copper Long Needs USD to Break Lower

By Thomas Schroeder

  • Copper’s bull wedge b -wave breakout stands out (high conviction set up) but needs a weaker USD for follow through. China is the wildcard but seems a bit early still.
  • Gold trendline and price pivot at 1,700 the key level to clear or will retest the 1,620 triple lows. 
  • DXY to rally off of 110 support within the triangle range and will see metals pullback. Bigger picture needs a break below 109.50 (bearish) to overlay with metals.

GMX – A DeFi Real Yield Protocol

By Edward Wu

  • GMX is a decentralized spot and perpetual exchange on the Ethereum Layer 2 scaling solution Arbitrum.
  • This protocol is absolutely a shining star in today’s market. Token price, TVL, and transaction volume are all in an upward trend.
  • It is also labeled as one of the best “Real Yield” opportunities for Liquidity Providers.

UI: On Pace for Record Revenue

By Hamed Khorsand

  • UI continued to report growth in its enterprise segment with total revenue rising to a new record. 
  • Ubiquiti has been operating through a difficult supply chain environment where particular chipsets have been nearly impossible to purchase beyond allocation from the producer.
  • Ubiquiti has expanded its enterprise product portfolio to include more options where Ubiquiti is generating recurring revenue

Apple Inc.: Latest Updates

By Baptista Research

  • Apple has been correcting along with broader markets and the company’s performance has also been hit by the Covid-19 outbreak in the Foxconn unit in China that produces iPhones.
  • The company’s results were fairly good and it surpassed Wall Street expectations in terms of revenues as well as earnings with a good performance from iPhone, accessories, home, and wearables.
  • Apple continues to grow its platform quite well in emerging markets with quite strong growth in Latin America, Southeast Asia, and India.

FTT Liquidity Faces Key Test

By Kaiko

  • Price Movements: For the first time since April, Lido staked ether (stETH) now trades at parity with ETH.
  • Market Liquidity: Coinbase reported lower than expected earnings due to a continued rout in trade volume.
  • Derivatives: ETH perpetual futures volume is now higher than BTC volumes as traders pounce at renewed volatility.

Mastercard Inc.: The Crypto Source Program & Other Drivers

By Baptista Research

  • With the backdrop of cross-border travel continuing to improve and consumer expenditure remaining resilient, Mastercard delivered strong earnings and revenue growth in its latest result.
  • Mastercard has expanded with gaming payouts, thus launching its Gaming Fast payout program.
  • For addressing domestic, cross-border, and account-to-account payments, it has signed an agreement with leading worldwide B2B solutions and networks, Pagero.

SAP SE ADR: Initiation of Coverage – Financial Forecasts

By Baptista Research

  • This is our first report on SAP, the global ERP, market leader.
  • SAP’s performance in the North American and Latin American markets is particularly robust.
  • The ERP transfer to the cloud is being led by SAP, which created the technology decades ago.

T-Mobile: Industry Specific Smart Solutions & Other Drivers

By Baptista Research

  • T-Mobile delivered a mixed set of results this quarter with revenues falling short of Wall Street expectations.
  • However, it did deliver an earnings beat as the management continued to capitalize on its network leadership position.
  • With the launch of Network pass and Easy Switch, T-Mobile is making it risk-free and simple to experience its network, also switch to T-Mobile.

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Nov 08
0

Daily Brief Thailand: I-Tail and more

By | Daily Briefs, Thailand

In today’s briefing:

  • I-Tail Corporation IPO: The Bear Case
  • I-Tail Corporation Pre-IPO – Peer Comparison Update – Adding in Its Only Local Peer

I-Tail Corporation IPO: The Bear Case

By Arun George

  • I-Tail (ITC TB), Thai Union Group (TU TB)’s pet care division, has started pre-marketing an up to US$600 million SET IPO, according to press reports.
  • In I-Tail Corporation IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case. 
  • The key elements of the bear case rest on its under-representation in the dog food category (largest pet food category), margins at or near the peak and declining FCF margin. 

I-Tail Corporation Pre-IPO – Peer Comparison Update – Adding in Its Only Local Peer

By Sumeet Singh

  • I-Tail, an OEM in the wet pet food category, aims to raise around US$500m in its Thailand IPO. It is a subsidiary of Thai Union Group (TU TB) .
  • As per ITC, it was the number two pet food company in Asia and in the top ten pet food companies globally. ITC expertise lies in fish-based wet pet food.
  • In our previous notes, we have looked at past performance, undertaken a peer comparison and spoken about valuation. In this note, we will add in its recently listed local peer.

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Nov 08
0

Daily Brief South Korea: HPSP, Coupang and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Shorting Setup on Additions to KS200/KQ150 with KODEX Battery ETF Flow
  • Coupang: Market Share Loss Likely Due to Launch of Naver’s 24 Hours Next Day Delivery Service

Shorting Setup on Additions to KS200/KQ150 with KODEX Battery ETF Flow

By Sanghyun Park

  • Korea’s partial short-selling system, implemented in May last year, created a new trading pattern, a surge in short selling for new additions, immediately after index rebalancing.
  • Canaria Bio, HPSP, and SungEel Hitech are highly likely to be the primary targets for short selling, but there is one more thing we need to consider.
  • KODEX will likely begin rebalancing buying on HPSP and SungEel on December 9, the same day the short-selling starts for them. So, we need a more flexible setup.

Coupang: Market Share Loss Likely Due to Launch of Naver’s 24 Hours Next Day Delivery Service

By Douglas Kim

  • In December 2022, Naver plans to launch its long awaited 24 hours delivery service (Naver Arrival Guarantee Solution), competing directly against Coupang’s “rocket delivery” services in Korea.
  • Coupang’s valuations are not attractive at current levels and the heightened competition in the 24 hour delivery service market from Naver/CJ Logistics is likely to negatively impact Coupang. 
  • By providing 24 hours quick delivery service, Naver is expected to take away market share from Coupang from the fast delivery services in Korea.

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Nov 08
0

Daily Brief Australia: Pilbara Minerals and more

By | Australia, Daily Briefs

In today’s briefing:

  • MSCI Australia Nov SAIR: Significant Pre-Positioning on the Potential Deletes

MSCI Australia Nov SAIR: Significant Pre-Positioning on the Potential Deletes

By Brian Freitas

  • We see two inclusions and two exclusions for the MSCI Australia Index at the November SAIR. Passive trackers will need to trade between 5-8x ADV on the stocks.
  • Cumulative excess volume on the stocks has been increasing steadily over the last few months, indicating a fair amount of pre-positioning.
  • Short interest on the potential deletions has spiked over the last couple of months and pre-positioning could be close to (or larger than) the estimated passive selling.

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Nov 08
0

Daily Brief Japan: Toshiba Corp, Kawasaki Kisen Kaisha, Internet Initiative Japan, Tokyo Stock Exchange Tokyo Price Index Topix and more

By | Daily Briefs, Japan

In today’s briefing:

  • Toshiba (6502 JP): JIP Lobs a Lower-Than-Expected Offer
  • KLine (Kawasaki Kisen (9107)) – ToSTNeT-3 For All The Marbles
  • Internet Initiative Japan (Buy) – Q2 22 Results Reaction: Mobile Recovery Boosts Corporate DX Growth
  • Deepening Cash Allocation Required This Year of a New All-Time High in Share Repurchases

Toshiba (6502 JP): JIP Lobs a Lower-Than-Expected Offer

By Arun George

  • The Nikkei Asia reports that JIP has submitted a formal proposal to privatise Toshiba Corp (6502 JP) for about JPY2.2 trillion (US$15 billion) based on “Toshiba’s current share price.” 
  • JIP’s offer is below expectations of around a JPY6,000 bid which is likely driven by the inability to secure sufficient debt financing. JIP remains in negotiations with banks. 
  • While there is a risk that JIP will be unable to improve its offer to secure Board approval, the downside is low as Toshiba/peers’ current price ratio is attractive. 

KLine (Kawasaki Kisen (9107)) – ToSTNeT-3 For All The Marbles

By Travis Lundy

  • On Thursday, Kawasaki Kisen Kaisha (9107 JP) announced earnings, lower-than-consensus guidance and a ¥100bn buyback via ToSTNeT-3 this week, and on market if not filled via ToSTNeT-3.
  • The stock fell 5+%. I wrote I thought it was a buy and that the buyback was “game-able.” It rose 10+% from then til now. 
  • That was the fun. Now we get the games. Positioning strategy matters. 

Internet Initiative Japan (Buy) – Q2 22 Results Reaction: Mobile Recovery Boosts Corporate DX Growth

By Kirk Boodry

  • Internet Initiative Japan (3774 JP) posted solid Q2 results with the best quarterly revenue growth since 2016 and a 12th consecutive quarter of margin expansion
  • Results were driven by growth tailwinds for corporate digitization which was also visible in KDDI/Softbank results as well as a recovery in mobile which was not
  • The company did not raise its full-year financial guidance despite an H1 beat but forecasts looks increasingly conservative

Deepening Cash Allocation Required This Year of a New All-Time High in Share Repurchases

By Aki Matsumoto

  • With company cash equivalents reaching all-time high of 140 trillion yen and many company managers feeling that their company’s stock price is undervalued, share repurchases will reach all-time high.
  • Since the introduction of the Corporate Governance Code in 2015, share repurchases have become an established cash allocation alternative for companies. Companies will continue to enhance the practices  over time.
  • There is a need to deepen communication by showing investors how the company uses cash in its growth strategy, not limited to shareholder returns.

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Nov 08
0

Daily Brief Indonesia: Blibli and more

By | Daily Briefs, Indonesia

In today’s briefing:

  • BliBli IPO Trading – Upsized, Priced near Top-End but Should Be Trading at Least 50% Lower

BliBli IPO Trading – Upsized, Priced near Top-End but Should Be Trading at Least 50% Lower

By Sumeet Singh

  • PT Global Digital (BliBli) raised around US$517m in its Indonesian IPO, after using the upsize option and pricing its deal just below the top-end.
  • BliBli provides e-commerce services across Indonesia to both retail consumers and institutions.
  • In our previous notes, we have looked at the company’s past performance. In this note, we will talk about the trading dynamics.

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Nov 08
0

Daily Brief India: Five Star Business Finance, Etfs Reliance India Nifty 50 and more

By | Daily Briefs, India

In today’s briefing:

  • Five-Star Business IPO – RHP Updates and Peer Comparion
  • Market Correction: An Opportunity in Disguise

Five-Star Business IPO – RHP Updates and Peer Comparion

By Sumeet Singh

  • Five Star Business Finance (0958461D IN) is looking to raise around US$250m in its upcoming 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.
  • In this note, we talk about the RHP updates and undertake a peer comparison.

Market Correction: An Opportunity in Disguise

By Private Investor

  • Equity markets have been under a correction phase for more a year now; Nifty topped out in Oct’21 and is now back to near highs.
  • In fact, last month’s close was an all time high close for Nifty on a monthly basis and 1st ever close above 18000 levels.
  • Though such market corrections are not good from the return’s perspective, but they play a very important role.

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Nov 08
0

Daily Brief Utilities: Natural Gas and more

By | Daily Briefs, Utilities Sector

In today’s briefing:

  • The Commodity Report #76

The Commodity Report #76

By The Commodity Report

  • Manufacturing Sentiment in the US continues to decline. US manufacturing neared stagnation in October as orders contracted for the fourth time in five months, while an index of prices paid fell to a more than two-year low.
  • As most commodity groups are heavily correlated with the ISM data, this will provide significant headwinds over the next six months or so, according to our leading indicators.
  • By now, there is quite a divergence in industrial production in general. We expect industrial production to crash over the next few months, which will continue to be a nasty factor for commodity demand.

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